Study Guide for Microeconomics
9th Edition
ISBN: 9780134741123
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Question
Chapter 12, Problem 14E
(a)
To determine
The total average, marginal costs of each firm for the output levels between 1 and 5 per month.
(b)
To determine
The output distribution when the price is set to $25 and the total output is 10 cartons.
(c)
To determine
The firms with incentive to cheat and not cheat.
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KidzPoses Inc., a profit-maximizing business, is the only photography business in town that specializes in portraits of small children. James, who owns and runs KidzPoses, expects to encounter an average of eight customers per day, each with a reservation price (shown in the following table). Assume James has no fixed costs, and his cost of producing each portrait is $12.
Customer Reservation Price ($ per photo)
1 50
2 46
3 42
4 38
5 34
6 30
7…
Two ready-to-eat breakfast cereal manufacturers, Lots of Sugar and Buckets of Goo, face combined demand for their products given by Q = 75 - P. Their total costs are given by TCLots of Sugar = 0.1Q2Lots of Sugar and TCBuckets of Goo = 5QBuckets of Goo. If they successfully collude, their total profits will be:
a. $62.50 b. $1,250.00 c. $125.00 d. $287.50 e. $1,287.50
onsider the table below and assume the market price is $35 per unit.
Totalproduct
Totalfixed cost
TotalVariablecost
0
150
0
1
150
50
2
150
75
3
150
112.4
4
150
150
5
150
200
6
150
270
7
150
360
8
150
475
9
150
620
10
150
800
Now assume there are 600 identical firms in this industry, that is, there are 600 firms, each of which has the same cost data as the single firm discussed above. Suppose, too, that the demand curve for this industry is as follows:
Price
Quantitydemanded
$20
6,800
30
5,975
45
5,500
60
5,125
75
4,500
95
4,200
120
3,600
150
2,400
In equilibrium each firm will realize:
Multiple Choice
an economic profit of $155.
a loss of $45.
an economic profit of $35.
a loss of $135.
Chapter 12 Solutions
Study Guide for Microeconomics
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