Question
In: Economics
Let a perfectly competitive industry have 100 identical firms with a marginal cost curve given by...
Let a perfectly competitive industry have 100 identical firms with a marginal cost curve given by MC = Q/2.
a. Construct the short run industry supply curve with 100 firms.
b. Let the market demand curve be Q = 4000 – 200*P. Find the short run equilibrium price, industry quantity, and firm quantity.
c. This is a constant cost industry with a cost of $8. Will firms be making profits or losses in the short run equilibrium in b?
d. Find the long run equilibrium price, industry quantity, firm quantity, number of firms, and profit for each firm.
Solutions
Rahul Sunny answered 6 months agoRelated Solutions
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 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
by the equation P = 1200 – 2Q where Q is the market quantity. In
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
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, 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,
suppose that a representative firm’s total cost is given by the
equation. TC = 100 + q^2 + 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...
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 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
quantity....
Suppose we have n firms in a perfectly competitive industry. The shapes of the marginal and...
Suppose we have n firms in a perfectly competitive industry. The
shapes of the marginal and average cost curves are as usual, i.e.,
they are U-shaped. The industry demand curve is downward sloping.
Please answer the following questions associated with this simple
model. a. Write down the basic assumptions of a perfectly
competitive industry. We have frequently stated that these
assumptions were very crucial in obtaining certain results from
this model. Explain each assumption in that sense in a few...
Suppose we have n firms in a perfectly competitive industry. The shapes of the marginal and...
Suppose we have n firms in a perfectly competitive industry. The
shapes of the marginal and average cost curves are as usual, i.e.,
they are U-shaped. The industry demand curve is downward sloping.
Please answer the following questions associated with this simple
model.
a. Write down the basic assumptions of a perfectly competitive
industry. We have frequently stated that these assumptions were
very crucial in obtaining certain results from this model. Explain
each assumption in that sense in a few...
In the long run in a perfectly competitive industry, price equals marginal cost and firms earn...
In the long run in a perfectly competitive industry, price
equals marginal cost and firms earn no economic profits. The
following two equations describe this long-run situation for prices
and costs, where the numbers indicate the amounts of each input
(labor and land) needed to produce a unit of each product (wheat
and cloth):
P wheat = 60w + 40r
P cloth = 75w + 25r
If the price of wheat is initially 100 and the price of cloth is...
3. In the long run in a perfectly competitive industry, price equals marginal cost and firms...
3.
In the long run in a perfectly competitive industry, price
equals marginal cost and firms earn no economic profits. The
following two equations describe this long-run situation for prices
and costs, where the numbers indicate the amounts of each input
(labor and land) needed to produce a unit of each product (wheat
and cloth):
P wheat = 60w + 40r
P cloth = 75w + 25r
If the price of wheat is initially 100 and the price of cloth...
Consider a perfectly competitive market where all firms have identical long-run marginal costs given by LRMC...
Consider a perfectly competitive market where all firms have
identical long-run marginal costs given by LRMC = 10. Furthermore,
suppose that the market demand curve is given by ? = 3000 −
50?.
a. Determine the long-run equilibrium quantity and price in this
market.
b. Determine the number of firms that operate in this market in the
long-run, assuming that a typical firm produces 25 units of
output.
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