Question

Suppose in Pakistan, all the firms are identical with identical
cost curves which mean

industry is perfectly competitive. Now please consider this
following information about the

industry: A representative firm’s total cost is given by the
equation TC = 100 + q2 + q where

q is the quantity of output produced by the firm. You also know
that the market demand for

this product is given by the equation P = 1000 – 2Q where Q is the
market quantity. In

addition you are told that the market supply curve is given by the
equation P = 100 + Q.

a. What is the equilibrium quantity and price in this market given
this information?

b. The firm’s MC equation based upon its TC equation is MC = 2q +
1. Given this information

and your answer in part (a), what is the firm’s profit maximizing
level of production, total

revenue, total cost and profit at this market equilibrium? Is this
a short-run or long-run

equilibrium? Explain your answer.

c. Given your answer in part (b), what do you anticipate will
happen in this market in the

long-run?

d. In this market, what is the long-run equilibrium price
(breakeven or MC=ATC) and what

is the long-run equilibrium quantity for a representative firm to
produce? Explain your

answer?

e. Given the long-run equilibrium price you calculated in part (d),
how many units of this

good are produced in this market?

Answer #1

A competitive industry currently consists of 50 identical firms.
An individual firm’s total cost function is given by TC = 1⁄2 q2 +
450 and its marginal cost MC = q, where q is the quantity supplied
by the firm. Market demand is given by Q = 4000 - 5P, where Q is
the market quantity demanded and P is the market price. In the long
run market equilibrium, how much will each firm produce?

Suppose that each firm in a competitive industry has the
following cost curves: Total cost: TC = 32 + 1⁄2 Q2; where Q is the
individual firm’s quantity produced. MC=Q. Assume the market price
is $14 per unit. If the market price falls, how much will each firm
produce in the long run? a. 32 b. 8 c. 11 d. 64

You are a producer in a constant-cost perfectly competitive
industry. Your long-run total, marginal, and average costs are
given by TC = 2Q² + 128, MC =
4Q, and ATC = 2Q+ (128/Q). What
is the long-run equilibrium price?

Suppose that the perfectly competitive for market for milk is
made up of identical firms with long-run total cost functions given
by:
TC = 4 q3 - 24 q2 + 40 q
Where, q = litres of milk. Assume that these cost functions are
independent of the number of firms in the market and that firms may
enter or exist the market freely.
If the market demand is :
Qd = 8,000 - 160 P
1. What is the long-run...

Suppose there are two firms operating in a market. The firms
produce identical products, and the total cost for each firm is
given by C = 10qi, i = 1,2, where qi is the quantity of output
produced by firm i. Therefore the marginal cost for each firm is
constant at MC = 10. Also, the market demand is given by P = 106
–2Q, where Q= q1 + q2 is the total industry output.
The following formulas will be...

Perfect Competition Question
The market for study desks is characterized by perfect
competition. All firms are identical; in particular, they have the
same technology (and thus
the same cost function). The total cost function of the
representative firm is given by the following equation:
TC = 4(qS)2+8(qS)+64
Suppose that the market demand is given by:
PD = 840 − 2QD
Note: Q represents market values and q represents individual firm
values.
a) Determine the equation for average total cost for...

1. In a given industry located in the town of Teahupo’o all
firms have access to the same technology. The cost curve for
Tikei’s firm is: TC = 3q2, where q is the output of
Tikei’s firm. Marginal cost is MC = 6q.
Initially, there are 60 firms in the industry (Tikei’s firm +
Mako’s firm + Moana’s firm + Vanea’s firm + 56 other firms). The 60
firms in the industry are identical in every way.
a) Find the...

Question 3:
A competitive industry consists of identical 100 producers,
all of whom operate with the identical short-run total cost curve
TC(Q)=40+2Q2TC(Q)=40+2Q2, where QQ is the annual output of a firm.
The market demand curve is QD=300−50PQD=300−50P, where PP is the
market price.
What is the each firm's short-run supply curve?
What is the short-run industry supply curve?
Determine the short-run equilibrium price and quantity in this
industry.

Suppose that the market for painting services is perfectly
competitive. Painting companies are identical; their long-run cost
functions are given by:
TC(Q) = 5 q3 - 45 q2 + 250 q
If the market demand is:
QD = 7,000 - 6 P
1. What is the quantity of output that minimizes average total
cost?
2. What is the long run equilibrium price?
3. Using market demand, what is the equilibrium total industry
output?
4. What is the equilibrium number...

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...

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