Question

a) Assume a perfectly competitive firm’s total cost (TC) for different levels of output Q is given by:

Q- a) Assume a perfectly competitive firm’s total cost (TC) for different levels of output Q is given by:

Q TC

0 50

1 100

2 140

3 170

4 190

5 210

6 230

7 260

8 300

9 350

10 410

At a price of $35 how many units will be produced in the short run? At this price how many units will be produced in the long run?

TC- 50,100

Answer #1

Marginal cost (MC) = Change in TC / Change in Q

Q | TC | MC | TR = $35 x Q | Profit = TR - TC |

0 | 50 | 0 | -50 | |

1 | 100 | 50 | 35 | -65 |

2 | 140 | 40 | 70 | -70 |

3 | 170 | 30 | 105 | -65 |

4 | 190 | 20 | 140 | -50 |

5 | 210 | 20 | 175 | -35 |

6 | 230 | 20 | 210 | -20 |

7 | 260 | 30 | 245 | -15 |

8 | 300 | 40 | 280 | -20 |

9 | 350 | 50 | 315 | -35 |

10 | 410 | 60 | 350 | -60 |

A perfectly competitive firm maximizes proft by equating Price with MC. From above table,

When Q = 7, Price = $35 and MC = $30, and when Q = 8, Price = $35 and MC = $40. Since the firm will produce when Price > MC, the corresponding short-run output is 7 units with P = $35 and MC = $30.

When Price = $35, firm is making negative profit (Loss) at every output level, so nothing will be produced in long run since firm will exit the market.

A perfectly competitive firm’s total cost function is given by:
TC = 400+4Q2 . How much output does the firm produce
in the long-run? What is the price of the product
in the long-run?

A perfectly competitive firm’s total cost function is given by:
TC = 200+2Q2 . How much output does the firm produce
in the long-run? What is the price of the product
in the long-run?

A firm has the following short run total costs, where Q is
output and TC is total cost:
Q
TC
0
$ 200
1
210
2
230
3
260
4
300
5
350
6
410
7
480
8
560
9
650
10
750
11
860
What is total fixed cost equal to?
What is average total cost at Q = 5?
What is average variable cost at Q = 7?
What is marginal cost at Q = 9?
At Q=9,...

A perfectly competitive firm’s total cost function is given
by: TC = 400+4Q^2 . The minimum point of average total cost (ATC)
is reached at Q=10. You also know that the market demand function
for this product is: QD=100-P. How many firms are in the market in
the long-run? (Hint: first you need to find the price in the
long-run)
Select one:
a. N=6
b. N=4
c. N=2
d. None of the above

Q-1: Sunrise Juice Company sells its output in
a perfectly competitive market. The firm's total cost function is
given in the following schedule:
Output
Total Cost
Marginal Cost
Average Total
(Units)
($)
($/unit)
Cost ($/unit)
0
50
--
--
10
120
7=(120-50)/(10-0)
12=(120-10)
20
170
?
?
30
210
?
?
40
260
?
?
50
330
?
?
60
430
?
?
Total costs include a "normal" return on the time (labor
services) and capital that the owner has...

(a) Suppose the total revenue (TR) and total cost (TC) curves of
the perfectly competitive firm are given by the following set of
equations: TR = 100Q and TC = Q2 + 4Q + 5, where Q is
the output. Derive the firm’s profit maximizing output and
calculate the total and average profit earned by the firm at this
level of output.
(b) How do you know that the equations above could not be
referring to a monopoly?

A perfectly competitive firm’s total cost function is given by:
TC = 200+2Q2 . You also know that the market demand
function for this product is: QD=100-P. How many
firms are in the market in the
long-run?
Select one:
a. N=10
b. N=8
c. N=6
d. None of the above

1. Suppose a perfectly competitive firm has a cost function
described by TC = 200Q + Q^2 + 225 Each firm’s marginal revenue is
$240. a. Find the profit maximizing level of output. b. Is this a
short-run or long-run situation? How do you know? c. Assuming that
this firm’s total cost curve is the same as all other producers,
find the long-run price for this good.

The total cost function for a firm in a perfectly competitive
market is TC = 350 + 15q + 5q2. At its profit maximizing
quantity in the short-run, each firm is making a loss but chooses
to stay open. Which of the following is/are necessarily true at the
profit maximizing quantity?
MR = 15 + 5q
P>15
AR > 350/q + 15 + 5q
Both A and B are true.
Both B and C are true.
All of the above...

A perfectly competitive firm in the short run has Total Cost and
Marginal Cost functions given by TC(Q)=9+Q+Q2 and
MC(Q)=1+2Q, respectively. The firm faces a price of P=$17.
Determine the output that the firm will produce and the profit.
Show the solution graphically.

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 44 minutes ago

asked 52 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago