Question
In: Economics
The wholesale market for Gala apples is perfectly competitive consisting of identical individual producers with cost...
The wholesale market for Gala apples is perfectly competitive
consisting of identical individual producers with cost function C =
200 + q2 where q is a firm’s number of crates of apples supplied.
The current market price is P = $50 per crate q. Market demand for
Gala apples is QD = 8,000 – 100P.
a. Find a typical firm’s supply function and the quantity a
supplier produces at the $50 price.
b. Find the market quantity demanded at price $50.
c. Calculate the profit/loss for a supplier and show
graphically the situation (for a firm and in the
market).
d. Explain how this market will adjust to a long-run
equilibrium. Find/calculate the long-run
equilibrium market price, quantity, and a firm’s profits.
(Assume market demand remains constant but that the number of
(identical) firms can increase/decrease, i.e., firms can enter/exit
the market.) Show the long-run equilibrium graphically for a firm
and in the market.
e. At the long-run equilibrium, how many firms exist in the
market and how much does each supply?
f. Show on producer surplus and consumer surplus on your
market graph above. Using these concepts, explain why we say that
the competitive market output maximizes the economic welfare of
suppliers and demanders.
(10 points) A firm’s production function is q = 10KL with per
unit input prices for labor w = 3 and
capital r = 2. Support your answers with a graph of
isoquant-isocosts.
a.
Calculatetheleast-costinputcombinationofLandKtoproduce60unitsofoutput.
b. Suppose the wage decreases to $2. How does this affect
input use holding constant output at 60? c. What are the total
costs of producing the two output levels in parts (a) and
(b)?
Solutions
Rahul Sunny answered 7 months agoRelated Solutions
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Suppose a perfectly competitive market consists of identical firms with the same cost function given by...
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C(q)=2q3 - 3q2 + 70q
The market demand is
QD= 2200 - 10p
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Round your answer to the nearest cent (0.01)
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Furthermore, suppose that a representative firm’s total cost is
given by the equation TC = 120 + q2 + 2q where q is the
quantity of output produced by the firm.
You also know that the market demand for this product is given
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addition you are told that...
Suppose there is a perfectly competitive industry where all the firms are identical with identical cost...
Suppose there is a perfectly competitive industry where all the
firms are identical with identical cost curves.
Furthermore, suppose that a representative firm’s total revenue
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The market demand for this product is given by the equation P =
5000 – 9Q where Q is the market quantity.
In addition you are told that the market...
Suppose there is a perfectly competitive industry where all the firms are identical with identical cost...
Suppose there is a perfectly competitive industry where all the
firms are identical with identical cost curves.
Furthermore, suppose that a representative firm’s total revenue
is given by the equation TR = q.p; where q is the quantity of
output produced by the firm and p the market price (=P).
The market demand for this product is given by the equation P =
5000 – 9Q where Q is the market quantity.
In addition you are told that the market...
Suppose there is a perfectly competitive industry where all the firms are identical with identical cost...
Suppose there is a perfectly competitive industry where all the
firms are identical with identical cost curves. Furthermore,
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Suppose there is a perfectly competitive industry where all the firms are identical with identical cost...
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firms are identical with
identical cost curves. Furthermore, suppose that a
representative firm’s total cost is given by the equation
where is the quantity of output produced by the firm. You also
know that the TC=200 +q^2+q where q is the quantity of output
produced by the firm. You also know that the market demand for this
product given by the equation P= 1000-2Q where Q is the market
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Suppose a perfectly competitive market is composed of 100 identical sellers (price-takers). Each individual seller faces...
Suppose a perfectly competitive market is composed of 100
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following private marginal costs of production:
Quantity
1
2
3
4
5
6
7
Marginal Cost
50
40
60
80
100
120
140
a. If the price of the good is $100, how many units would this
firm produce? How many would be produced in the market?
b. If the price of the good is $120, how many units would this
firm produce?...
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