Question

Every firm in a competitive market has the production function Q = K.5L.5and it is observed...

  1. Every firm in a competitive market has the production function

Q = K.5L.5and it is observed that long-run total market supply is described by the function P = .025Q. These facts suggest that

  1. This is a decreasing cost industry
  2. This is an increasing cost industry.
  3. The price of at least one input increases as market demand for this good increases.
  4. Some owners of resources used in the production of this product earn economic rents.
  5. None of the above.

  1. If the demand function for X is Q = APb and b= minus 2
    1. Consumer expenditure rises with price initially when price is low and price elasticity of demand is between Zero and minus one and then falls when price rises into the range where price elasticity of demand is less than 1.
    2. Consumer expenditure on the good increases as price falls
    3. Consumer expenditure on the good decreases as price falls
    4. Consumer expenditure is unchanged when price falls
    5. None of the above.

  1. If the quantity demanded of a good is Q = 100 – 10P and long run total cost is C = 15Q2 the long run profit maximizing output produced in a perfectly competitive market will be
    1. 30
    2. 50
    3. 28
    4. 100
    5. None of the above.

Homework Answers

Answer #1

Every firm in a competetive market has the production function Q=K.5L and it is observed that long run total market supply is described by the function P=.025Q. These facts suggest that (a) This is a decreasing cost industry.

If the demand function for X isQ = APb and b = -2 (a) Consumer expenditure rises with price initially when price is low and price elasticity of demand is is between Zero and minus one and then falls when price rises in to the range where price elasticity of demand is less than 1 .

If the quantity demand of goods is Q=100 - 10P and long run total cost is C =15Q2 the long run profit maximising output produced in a perfectly competitive market will be (d) 100 .

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If the marginal cost of production of a good is a positively sloped function of the...
If the marginal cost of production of a good is a positively sloped function of the quantity supplied to the market and the price of the good is a negatively sloped function of the quantity demanded, In a monopoly market price there will always be a dead-weight loss compared to the result of a competitive market. In a competitive market, the long-run equilibrium quantity supplied and demanded will be the quantity at which long run marginal cost and price are...
The long run cost function for each (identical) firm in a perfectly competitive market is  C(q) =...
The long run cost function for each (identical) firm in a perfectly competitive market is  C(q) = q1.5 + 16q0.5 with long run marginal cost given by LMC = 1.5q0.5 + 8q-0.5, where  q is a firm’s output. The market demand curve is  Q = 1600 – 2p, where Q  is the total output of all firms and p  is the price of output. (a) Find the long run average cost curve for the firm. Find the price of output and the amount of output...
3: For each (identical) firm in a perfectly competitive market the long-run cost function is C(q)...
3: For each (identical) firm in a perfectly competitive market the long-run cost function is C(q) = q1.5 + 16q0.5 with long run marginal cost being LMC = 1.5q0.5 + 8q-0.5, where q = firm’s output. Market demand curve: Q = 1600 – 2p, where Q = total output of all firms, and p = price of output. (a) For the firm find the long run average cost curve , as well as the price of output and the amount...
The total cost function for each firm in a perfectly competitive industry is TC(y)=100+8y^2 . Market...
The total cost function for each firm in a perfectly competitive industry is TC(y)=100+8y^2 . Market demand is q=2000-(market price) . Find: the long run equilibrium firm quantity (y), market quantity (q), amount of firms, and price.
Each firm in a competitive market has a cost function​ of: Upper C equals 36 plus...
Each firm in a competitive market has a cost function​ of: Upper C equals 36 plus q squaredC=36+q2​, so its marginal cost function is MC equals 2 qMC=2q. The market demand function is Upper Q equals 48 minus pQ=48−p. Determine the​ long-run equilibrium​ price, quantity per​ firm, market​ quantity, and number of firms. The output per firm is nothing. ​(round your answer to the nearest​ integer)
Suppose a firm operates in a perfectly competitive market where every firm has the same cost...
Suppose a firm operates in a perfectly competitive market where every firm has the same cost function given by: C(q)=5q2+q+20 Suppose the market price changes. Below what price will this firm shut down? (what is the "shut-down price"). Sandboxes are produced according to the following cost function: c(q) = q2 + 100 where the fixed cost of 100 represents an annual license fee the firms pay. Every firm uses the same technology to produce sanboxes. Recent trends have increased the...
Suppose a representative firm producing in a perfectly competitive industry has the following cost function: C(q)...
Suppose a representative firm producing in a perfectly competitive industry has the following cost function: C(q) = q2 + 8q + 36 a. Solve for the firm’s average cost function. b. At what level of q is average cost minimized (i.e. what is the minimum efficient scale for the firm)? What is the value of average cost at this level of q? c. Suppose all firms in this industry are identical and the demand function for this industry is as...
The market demand function for a good is given by Q = D(p) = 800 −...
The market demand function for a good is given by Q = D(p) = 800 − 50p. For each firm that produces the good the total cost function is TC(Q) = 4Q+ Q^2/2 . Recall that this means that the marginal cost is MC(Q) = 4 + Q. Assume that firms are price takers. (a) What is the efficient scale of production and the minimum of average cost for each firm? Hint: Graph the average cost curve first. (b) What...
If the elasticity of demand for good x is minus 0.5 at the price P= $10...
If the elasticity of demand for good x is minus 0.5 at the price P= $10 and quantity Q = 8000, what is It the value of the parameter b if the demand function is of the form Q = A + bP? What is the value of the parameter A? At what price and quantity is total consumer expenditure for good x at its maximum? At price = $10, quantity = 8000 and Income(M) = $1000, the income elasticity...
Question 3 The long run cost function for each (identical) firm in a perfectly competitive market...
Question 3 The long run cost function for each (identical) firm in a perfectly competitive market is  C(q) = q1.5 + 16q0.5 with long run marginal cost given by LMC = 1.5q0.5 + 8q-0.5, where  q is a firm’s output. The market demand curve is  Q = 1600 – 2p, where Q  is the total output of all firms and p  is the price of output. (a) Find the long run average cost curve for the firm. Find the price of output and the amount...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT