Myeconlab With Pearson Etext -- Access Card -- For Microeconomics
9th Edition
ISBN: 9780134143071
Author: PINDYCK, Robert, Rubinfeld, Daniel
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 5E
(a)
To determine
Identify the output level produced by the firm.
(b)
To determine
Identify the value of
(c)
To determine
Identify the profit in the short run.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose the cost function for a firm is given by C(Q) = 100 + Q2. If the firm sells output in a perfectly competitive market and other firms in the industry sell output at a price of $10,A) What level of output should the firm produce to maximize profits or minimize losses?B) What are the profits at the optimal output amount?
C) Should the company produce this optimal amount or should it shut down?
The market price a perfectly competitive firm has to take is pm and the total cost to the firm is TC(Q)=aq+Bq2 +y , where y is fixed cost of the firm . Find the optimal output to the firm in terms of market price pm. Express also maximum profit. How does maximum profit depend on the market price and the level of fixed cost? All parameters are assumed to be positive.?
Suppose the cost function for a firm is given by C(Q) = 100 + Q2. If the firm sells output in a perfectly competitive market and other firms in the industry sell output at a price of $10, what level of output should the firm produce to maximize profits or minimize losses? What will be the level of profits or losses if the firm makes the optimal decision?
Chapter 8 Solutions
Myeconlab With Pearson Etext -- Access Card -- For Microeconomics
Ch. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 6RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQ
Ch. 8 - Prob. 11RQCh. 8 - Prob. 12RQCh. 8 - Prob. 13RQCh. 8 - Prob. 14RQCh. 8 - Prob. 1ECh. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Suppose you are the manager of a watchmaking firm...Ch. 8 - Prob. 5ECh. 8 - Prob. 6ECh. 8 - Prob. 7ECh. 8 - Prob. 8ECh. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 - A sales tax of 1 per unit of output is placed on a...Ch. 8 - Prob. 15E
Knowledge Booster
Similar questions
- A firm in a perfectly competitive industry has patented a newprocess for making widgets. The new process lowers the firm’saverage cost, meaning that this firm alone (although still aprice taker) can earn real economic profits in the long run. a. If the market price is $20 per widget and the firm’s marginalcost is given by MC=0.4q , where q is the dailywidget production for the firm, how many widgets willthe firm produce? b. Suppose a government study has found that the firm’snew process is polluting the air and estimates the socialmarginal cost of widget production by this firm to be. If the market price is still $20, what is thesocially optimal level of production for the firm? Whatshould be the rate of a government-imposed excise tax tobring about this optimal level of production? c. Graph your results.arrow_forwardA perfectly competitive firm sells its good for $20. If marginal cost is four times the quantity produced, how much does the firm produce? Why? Assuming perfect competition, there is not enough information to determine how much the firm is producing. Assuming perfect competition, the firm is producing where MC is twice MR. If the price is $20, then MC is $40. This means that the firm is producing 10 units. Assuming perfect competition, the firm is producing where MR = MC. If the price is $20 and MC is four times the quantity, it is producing 80 units. Assuming perfect competition, the firm is producing where MR = MC = P. Since price is $20, MR is $20. If MC is 4 times the quantity, it is producing 5 units.arrow_forwardThe cost function for a firm is given by C(Q) = 5+q^2. If the firm sells output in a perfectly competitive market and other firms in the industry sell output at a price of $20, what price should the manager of this firm put on the product? What level of output should be produced to maximize profits? How much profit will be earned?arrow_forward
- Suppose the total cost to produce quantity q is TC(q) = 10 + q^2/10, and hence, marginal cost is MC(q) = q/5. If this firm is a price-taker and the market price is p = 10 and its fixed cost is sunk, then the firm's profits will be:arrow_forwardConsider a firm in a Perfectly Competitive industry. Suppose the price in this industry is $26. The total cost (TC) function for each firm is TC = 0.05q^2 + 1,080. If the marginal cost (MC) function for the firm is MC = 0.1q, a)what is the profit maximizing quantity for the firm to produce? b)what is the profit for the firm at the profit maximizing point?arrow_forwardThe cost function for Acme Laundry is: TC(q)=10+10q+q^2 so its marginal cost function is: MC(q)=10+2q where q is tons of laundry cleaned. Derive the firm's average cost and average variable cost curves. What q should the firm choose so as to maximize its profit if the market price is p? How much does it produce if the competitive market price is p = 50?arrow_forward
- Can these be answered as well? Derive the firm's average cost and average variable cost curves. What q should the firm choose so as to maximize its profit if the market price is p?arrow_forwardA firm produces a product in a competitive industry and has a total cost function C = 80 + 4q + 2q2 and a marginal cost function MC = 4 + 4q. At the given market price of $28, the firm is producing 7 units of output. Is the firm maximizing its profit? What quantity of output should the firm produce in the long run?arrow_forwardAssume that a competitive firm has the total cost function: TC=1q3−40q2+820q+1900 T C = 1 q 3 - 40 q 2 + 820 q + 1900 Suppose the price of the firm's output (sold in integer units) is $600 per unit. How many units should the firm produce to maximize profit? What is the total profit at the optimal output level? Please specify your answers as integers.arrow_forward
- Assume that a competitive firm has the total cost function: TC=1q3−40q2+880q+2000 T C = 1 q 3 - 40 q 2 + 880 q + 2000 Suppose the price of the firm's output (sold in integer units) is $550 per unit. Create tables (but do not use calculus) with columns representing cost, revenue, and profit to find a solution. How many units should the firm produce to maximize profit? Please specify your answer as an integer. What is the total profit at the optimal output level? Please specify your answer as an integer.arrow_forwardWhen economists talk about a barrier to entry, they are referring to a.the downward-sloping portion of the long-run average total cost curve. b.a factor that makes it difficult for potential competitors to enter a market. c.the opportunity cost of equity capital that is incurred by a firm producing at minimum total cost. d.the declining output experienced as additional units of a variable input are used with a given amount of a fixed input.arrow_forwardConsider a firm with constant marginal costs. Which of the following statements is correct regarding its isoprofit curves? Select one: a. Each isoprofit curve depicts the firm’s profit for different outputs for a given price of the output good. b. The isoprofit curves are upward-sloping. c. The isoprofit curves cannot cross. d. The higher the price the higher the profit, so constant profits imply constant prices.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
