Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 8E
(a)
To determine
Identify marginal cost (MC), average cost (AC), and
(b)
To determine
Identify the price level that firm supplies zero output.
(c)
To determine
Identify the output supply curve of the firm.
(d)
To determine
Identify the price level that the firm can produce 6 units of output.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost of $200.
What is its profit? What is its marginal cost? What is its average variable cost?
A profit-maximising firm in a competitive market is currently producing 1,000
units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000.
a) What is its profit?
b) What is its marginal cost?
c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?
The wheat industry is comprised of many firms producing an identical product. Market demand and supply conditions are indicated in the left-hand panel of the figure attached; the long-run cost curves of a wheat farmer are shown in the right-hand panel. Currently, the market price for wheat is $2 per pound, and at that price, consumers are purchasing 800,000 pounds of wheat per day.
Using the graphs attached, answer the following:
a. How many pounds of wheat will each farmer produce if they want to maximize profits?
b. How many farmers are currently serving the industry (fractional numbers are fine)?
c. In the long run, what will the equilibrium price of wheat be? Briefly explain your answer.
Chapter 8 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
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 perfectly competitive industry is in long-run equilibrium. Each of the identical firms has a long- run cost function C = 100 + q². As a result, a firm's marginal cost function is MC = 2q. In the long-run competitive equilibrium, (a) How much does the firm produce? (b) What is the equilibrium price? (c) If the market quantity demanded at the equilibrium price is Q = 2500, how many firms are in the market?arrow_forwardIn the long-run equilibrium of a competitive market with identical firms, what are the relationships among price (P), marginal cost (MC), and average total cost (ATC)?arrow_forwardConsider a competitive industry with a large number of firms, all of which have identical cost functions c(y) = y2 + 1 if y > 0 and c(y) = 0 ify = 0. The demand curve for this industry is D(p)= 52-p.1. Find marginal cost and average cost functions.2. What is the competitive price in this market?3. What will be the number of firms in the industry?arrow_forward
- Consider a kettle firm A in a perfectly competitive market. Table 1 shows the quantity produced per hour (Q) and the total cost (TC) in the short run. Quantity 0 12345C70 2 6 8 Total cost 17 30 40 55 75 100 130 165 210 Fixed cost 17 17 17 17 17 17 17 17arrow_forwardConsider a competitive industry with a large number of firms, all of which have identical cost functions c(y) = y2 + 1 if y > 0 and c(y) = 0 if y = 0. The demand curve for this industry is D(p)= 52-p. 1. Find marginal cost and average cost functions.2. What is the competitive price in this market?3. What will be the number of firms in the industry?arrow_forwardGood Grapes is selling grapes in a purely competitive market. Its output is 5,000 pounds, which it sells for $5 a pound. At the 5,000-pound level of output, the average variable cost is $4.00, the marginal cost is $4.25, and the average total cost is $4.50 a pound. Should the firm increase output, decrease output, or not produce? Why? How should the firm determine the optimal level of output?arrow_forward
- a) Find the long run equilibrium price. Find the minimum efficient scale of the typical firm. Find the typical firm’s average cost when it operates at minimum efficient scale. In the long run, what price will prevail in this market? In words, clearly justify your answer. Suppose demand is QD = 3,200 – 100P. (b) Explain why you expect the number of firms in this market to be fifty-five. In this market, what is the short run supply function of the typical firm? What is the short run market supply function? Suppose the local government introduced a $90 licensing fee that raised the fixed cost from $160 to $250. c) Would the introduction of the licensing fee affect the short run equilibrium price or quantity? Justify your answer? Clearly explain why you expect that in the long run fewer larger firms will operate in this market. After the introduction of the licensing fee, what is the new long run equilibrium price? How many firms will survive in this market?arrow_forwardFor Parts (A) through (C) below, refer to the figure and table below. The figure below displays the short-run MC, AVC, and AC for a firm. The table displays the MC, AVC, and AC at specific levels of output for the same firm. q 0 4 6 MC(q) AVC(q) 10 10 6 6 14 8 AC(q) ∞ 15 14 MC(q) B) If the price of the good is $15 (p = 15), select the statement below that is true: A. The firm's profit in the short-run will be negative ( 0) in the short-run, what is the lowest the price (p) could be? D. The firm's profit in the short-run will be positive (π > 0). E. There is not enough information to know whether the profit will be greater than, less than, or equal to zero. AVC(q) > 8 60.00 9arrow_forwardDerive theoretically and graphically the supply curve of an industry.arrow_forward
- (a) Let the industry producing soybeans be in a long-run equilibrium. What is the equilibrium price of a bushel of soybeans? How many billions of bushels are produced? How many farmers are there in the industry? What is the shipping fee per bushel of soybeans? (b) Suppose that the demand for soybeans drops due to decreased im- port by China and becomes Q = 15.3 − p. In a new long run equilibrium, what is the equilibrium price of a bushel of soybeans? How many billions of bushels are produced? How many farmers are there in the industry? What is the shipping fee per bushel? (c) Calculate the change in the producers’ surplus between the situations described in (a) and (b). (d) Show that the decrease in the producers’ surplus equals to the decrease in the total shipping fees as the industry contracts incrementally from the equilibrium output in (a) to the equilibrium output in (b).arrow_forwardSuppose the competitive market price is $60, and a competitive firm’s total costs = q^2 - 6q + 990 and marginal cost = 2q - 6. a. Solve for the profit-maximizing (or loss minimizing) quantity (q*). b. What is the market equilibrium price? c. Should the competitive firm produce q*? Explain why using one of the four key questions and solutions. d. Does the competitive firm make a profit? Explain why using one of the four key questions and solutions. e. How much profit (or loss) does the competitive firm make?arrow_forwardA price-taking firm's variable cost function is vC = 20°, where Qis its output per week. It has a sunk fixed cost of $256 per week. Its marginal cost is MC = 6Q°. a. What is the firm's supply function when the $256 fixed cost is sunk? Instructions: Enter your answer as a whole number. Q= (P/6)0.5 for P $| b. What is the firm's supply function when the fixed cost is avoidable? Instructions: Enter your answer as a whole number. Q= (P/6)0.5 for P2 $arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education