Question

Find the short-run supply function of a perfectly competitive firm for the given short-run cost functions - (a) c(q) = q 1.5 + 8q 0.5 + 16 for all q ? 0. Suppose there are ten identical firms in the industry. The short-run market demand curve is p = 100 ? Q. (a) Find the short-run market equilibrium for part (a) (b) What is the value of consumers’ and producers’ surplus for part (a)

Answer #1

1. a) For a perfectly competitive firm, the supply curve is the
portion of its marginal cost curve lying above the minimum average
variable cost **curve**.

Hence, C(q) = q^{1.5} + 8q ^{0.5} + 16

Now, differentiating this wrt q, we have

MC = C'(q) = 1.5*q^{0.5} + 4*q^{-0.5}

Hence, MC is

which is also the supply curve.

2. a) Demand is p = 100 - q (assuming the ? is -)

Supply =

At equilibrium, Demand = supply

Hence,

Hence, q = 21.63 = 22 units

Price = 100 - Q = 100 - 22 = $78

b) Consumer surplus = 0.5*(100 - 78)*(22) = 242

Producer surplus = 0.5* (22)*22 = 242

Find the long-run supply function of a perfectly competitive
firm for each cost function given below:
(b) c(q)= q^1.5+ 8q^0.5 for all q >0.
Suppose the long-run market demand curve is p = 100 - Q.
(a) Find the long-run market equilibrium.
(b) What are the values of consumers’ and producers’ surplus

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...

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...

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...

2. In the local cabbage market, there are 5,000 producers that
have identical short-run cost functions. They are: where q is the
number of bushels produced each period. Out of the fixed cost, 50%
is sunk and 50% is non-sunk. The short-run marginal cost function
for each producer is: MC(q) = 0.05q. (3*2.5 = 7.5) a) If the local
cabbage market is perfectly competitive, what is each cabbage
producer's short-run supply curve? Derive the local market supply
curve of cabbage....

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....

2. 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...

8. Suppose that there are 100 identical firms in a perfectly
competitive industry. Each firm has a short-run total cost curve of
the form C(q) = 1/300q3 +0.2q2 + 4q + 10
(d) A perfectly competitive market has 1,000 firms. In the very
short
run, each of the firms has a fixed supply of 100 units. The
market
demand is given by
Q = 160, 000 - 10,000P
(e) Calculate the equilibrium price in the very short run.
(f) Calculate...

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...

1) A perfectly competitive firm's short-run supply curve is
its:
A. average variable cost curve above the marginal cost
curve.
B. marginal cost curve above the average fixed cost curve.
C. marginal cost curve above the average total cost curve.
D. marginal cost curve above the average variable cost
curve.
2)Economic Profit
A. (per unit) is price minus average variable cost.
B. is correctly described by all of these.
C. as a total amount, is (P - ATC) times quantity....

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 12 minutes ago

asked 21 minutes ago

asked 35 minutes ago

asked 35 minutes ago

asked 45 minutes ago

asked 50 minutes ago

asked 58 minutes ago

asked 58 minutes ago

asked 58 minutes ago

asked 58 minutes ago

asked 1 hour ago

asked 1 hour ago