Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506893
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 9, Problem 3CQ
To determine
Normal profit of perfect competitive market in the long run.
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Microeconomics: Private and Public Choice (MindTap Course List)
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- Explain why a firm might want to produce its good even after diminishing marginal returns have set in and marginal cost is on the rise. People often believe that large firms in an industry have cost advantages over small firms in the same industry. For example, they might think a big oil company has a cost advantage over a small oil company. For this to be true, what condition must exist? Explain your answer.arrow_forwardConsider the table below that describes the costs associated with producing a good (Q). Q Total Variable Cost Total Cost 0 0 30 1 30 60 2 50 80 3 65 95 4 77 107 5 87 117 6 100 130 7 120 150 8 160 190 9 220 250 10 300 330 What is the value of the marginal cost of producing the second unit? Enter your answer as a number below. Do not include a "$" sign.arrow_forwardSuppose a typical (representative) corn farm has a short run production technology which results in the outcome of U-shaped Average Variable Cost (AVC), Average Total Cost (ATC), and Marginal Cost (MC). Further, suppose this firm sells its product in a market where the price of the good is determined by the interaction of market Demand and Supply. Because an individual firm is very small compared to the rest of the market, we treat the market price as the price given to the firm, and the individual firm cannot impact that price. assume we are in the Short Run for this firm. In graphing, put $ on the vertical axis and lower-case q (firm output) on the horizontal axis. Start with the AFC0, AVC0, ATC0, and MC0 curves . show shifts in any of the cost curves, reflecting the higher cost of land (keeping in mind that this higher cost is independent of how much or how little corn is actually produced) and labeling the changed cost curves with a subscript 1. On the graph with $ on the…arrow_forward
- According to macroeconomic theory, in a perfectly competitive market a company: Group of answer choices is a cost maximizer. is a price searcher. is a price taker. is a quantity taker.arrow_forwardI need some help and can you show me all the steps, please The profit of a firm is described by the following function: f(Q) = -8Q^3 + 30Q^2 – 120Q – 100 where Q is the quantity produced. (A) Find the stationary points for this function. (B) Using the first derivative test, find for what value of Q the profit maximised. (C) Find the feasible values of Q where the graph of the profit function is concave up.arrow_forwardUsing the figure above, what is the optimal quantity of goods for the firm to produce? Using the figure above, what is the optimal price for the quantity of goods for the firm to produce? Using the figure above, what is the total revenue and the total cost for the firm? Using the figure above, what is profit/loss for the firm? ***Please answer question number 3arrow_forward
- 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.?arrow_forwardThe cost function for Acme Laundry is C(q)=50+30q+q2, where q is tons of laundry cleaned. What q should the firm choose so as to maximize its profit if the market price is p?arrow_forwardWould a cost function of 0 mean a linear line of supply curve? For example if 10 firms are on the market selling 10 goods and the cost function is 0?arrow_forward
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