Question

A perfectly competitive constant-cost industry has a large number of potential entrants. Assume that each firm...

A perfectly competitive constant-cost industry has a large number of potential entrants. Assume that each firm minimizes its LRAC at an output of 20 units and at an average cost of $10/unit and has an upward sloping MC curve. Market demand is given by QD = 1500 – 50P.

a. Draw a LR graph representing each firm, including the LR equilibrium price, quantity, and profit.

b. Draw a graph of the LR demand and supply for the market, including the LR equilibrium price and quantity for the market.

c. Briefly describe and explain the shape of the LR market supply curve.

d. What is the consumer surplus (numerical value) at the competitive equilibrium? Identify the CS in your graph from part (b).

e. What is the producer surplus (numerical value) at the competitive equilibrium? Identify the PS in your graph from part (b).

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
suppose that perfectly competitive baseball industry has a large number of potencial entrants. each firm has...
suppose that perfectly competitive baseball industry has a large number of potencial entrants. each firm has the same cost structure such that the long run average cost is minimized at 210 baseball per day (q= 210). the firms minimum long run average cost is $0.10. total market demand is given by Qd= 400 - 100p. A. what is the industry’s long run supply schedule? B. what is the long run equilibrium price (P*) and total industry output (Q*)? C. graph...
Problem 1. A perfectly competitive painted necktie industry has a large number of potential entrants. Each...
Problem 1. A perfectly competitive painted necktie industry has a large number of potential entrants. Each firm has an identical cost structure such that long-run average cost is minimized at an output of 20 units (qi = 20). The minimum average cost is $10 per unit. Total market demand is given by: Q = 1,500 – 50P. a. What is the industry’s long-run supply schedule? b. What is the long-run equilibrium price (P*), the total industry output (Q*), and the...
A perfectly competitive industry has a large number of potential entrants. All firms have identical cost...
A perfectly competitive industry has a large number of potential entrants. All firms have identical cost structure and minimize the unit cost at the same point. (a.) If STC=0.5q2+50,derive the MC and AC functions. (b.) Find the quantity and the cost at the point where the unit cost is minimized. (c.) If total market demand is P = 30 - 1/30Q, what is the price and the number of firms needed to satisfy the total market demand. (d.) Derive the...
Consider a perfectly competitive market with demand Q=1,000-4P. The marginal cost for each firm in the...
Consider a perfectly competitive market with demand Q=1,000-4P. The marginal cost for each firm in the market is constant at MC=4. Determine the competitive equilibrium price and quantity. . Graph demand, supply, and the equilibrium found in part A). Determine consumer surplus, producer surplus, and total surplus. Is consumer surplus or producer surplus equal to zero? Why or why not? Is this question representative of a long or short-run perfectly competitive market? How do you know?
Deadweight Loss] Suppose the market for corn in Banana Republic is competitive. The domestic supply and...
Deadweight Loss] Suppose the market for corn in Banana Republic is competitive. The domestic supply and demand function of corn is Qs = 10P and Qd = 100 − 10P, respectively. Both of them measured in billions of bushels per year. (a) Calculate the equilibrium price and quantity, consumer surplus (CS), and producer surplus (PS). (b) Suppose the government offers a subsidy of $2 per bushel to the firms. In equilibrium, the consumers are paying $4 per bushel and the...
Assume that the manufacturing of barbie doll is a perfectlycompetitive industry. The market demand for...
Assume that the manufacturing of barbie doll is a perfectly competitive industry. The market demand for barbie doll is described by a linear demand              function :Qd = 6000 – 50P   ; P = price of a barbie doll.                              9                               There are fifty manufacturers of barbie dolls. Each manufacturer has the same             production costs given as TC(q) = 100 +q2 + 10q ; q = quantity of barbie doll.     Show that a firm in this industry maximizes profit by producingq = (P -10)...
The demand curve of a perfectly competitive product is described by the equation:     P =...
The demand curve of a perfectly competitive product is described by the equation:     P = $1000 – Q    where Q = thousands The supply curve is given by     P = $100 + 2Q     where Q = thousands Graph the demand and supply curves; use a grid size of 100. Calculate the equilibrium price and quantity (carefully state the units).  Find the consumer surplus CS, the producer surplus PS, and the deadweight loss DWL, carefully stating the units.
Q3) Assume that the manufacturing of cellular phones is a perfectly competitive industry. The market demand...
Q3) Assume that the manufacturing of cellular phones is a perfectly competitive industry. The market demand for cellular phones is described by a linear demand function: QD=(6000-50P)/9. There are 50 manufacturers of cellular phones. Each manufacturer has the same production costs. These are described by long-run total cost functions of TC(q) = 100 + q2 + 10q. 1) Show that a firm in this industry maximizes profit by producing q = (P-10)/2 2)Derive the industry supply curve and show that...
Assume that the industry for pickles is perfectly competitive. There are 150 producers. 100 of the...
Assume that the industry for pickles is perfectly competitive. There are 150 producers. 100 of the firms are “high-cost,” with short-run supply curves Qhc = 4P, while the others are “low-cost,” with short-run supply curves Qlc = 6P. Quantities are measured in jars and prices in dollars. A. Derive the short-run industry supply curve for pickles. B. Assume the market demand curve for pickles is given by Qd = 6,000 – 300P. Find the market equilibrium price and quantity. C....
Suppose a representative firm in a perfectly competitive industry has the following total cost of production...
Suppose a representative firm in a perfectly competitive industry has the following total cost of production in the short run: TC = Q3 - 60Q2 + 3000Q. a) What will be the long run equilibrium quantity for the firm? What will be the long run equilibrium price in this industry? b) If the industry demand is given by QD = 12400 - 4P. how many firms will be active in the long- run equilibrium? c) Suppose the firm faces a...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT