Consider a perfectly competitive local market for retail gasoline fuel in Ontario for which the demand...

Consider a perfectly competitive local market for retail gasoline fuel in Ontario for which the demand side comprises 30,000 vehicles. Each gasoline firm in the market has an annual long-run total cost function of

{ ??(?) = ? + 0.62? + (?^2 / 125,000,000) ?? ? > 0

??(?) = 0 ?? ? = 0

where ? is fixed cost and ? is firm-level output in litres of gasoline retailed per year. Each firm owns a single facility (i.e. gas station), hires a manager and retains insurance, which are the only fixed factors of production. A gas station (land, building, siteworks and equipment) is a $2,000,000 capital investment that is financed by shareholders whom are able to earn an annual rate of return of 6.5% on investments elsewhere. A manager’s salary and benefits are $60,000 per year and the cost of insurance is $10,000 per year. The annual demand for gasoline in the market is given by ?(?) = 100,000,000 − 50,000,000? where ? is the price per litre. Let ? = ?? denote industry level output where ? is the number of firms operating in the market

Expert Solution

Rahul Sunny answered 6 months ago

Consider a perfectly competitive labor market in which the demand for labor is given by E...

Consider a perfectly competitive labor market in which the demand for labor is given by E = 24,000 – (2,000/3)W, and the supply of labor is given by E = –8,000 + 2,000W. In these equations, E is the number of employee-hours per day, and W is the hourly wage. a. What is the equilibrium number of employee-hours each day? employee-hours each day In equilibrium, what was the dollar value of the additional output generated by the last employee-hour hired...

Which of the following is true in a theoretical perfectly competitive market? market demand is perfectly...

Which of the following is true in a theoretical perfectly competitive market? market demand is perfectly inelastic a firm's marginal revenue curve is equal to the market price market demand in a perfectly elastic an individual firm can obtain a higher price by reducing their level of output.

Consider the perfectly competitive market for canoes. Suppose the market demand for canoes is described by:...

Consider the perfectly competitive market for canoes. Suppose the market demand for canoes is described by: Q d = 200 − 2 P and the market supply of canoes is described by: Q s = 2 P. Suppose there is currently a price floor of $70 in place in the market for canoes. Consumer surplus under this price floor is (A) $900 (B) $4,900 (C) $2,500 (D) $1,800 . Suppose the government removes the price floor, consumer surplus will (A)...

Suppose there is a disruption on a substantial amount of supply in the gasoline market. If the gasoline market is perfectly competitive, will a gasoline shortage result?

What's Right With Gas PricesThe Wall Street Journal - February 25, 2012It is always pitiful to see a president of the United States in the grip of energy panic, uttering desperate nonsense about gasoline prices.President Bush did it, with his temporary insanity over switchgrass. President Obama is doing it, though his condition might be better described as temporary sanity. He who once would stop the oceans from rising by getting America off oil now wants credit for boosting America's production...

Consider a perfectly competitive market in which all firms areidentical. The market is in the...

Consider a perfectly competitive market in which all firms are identical. The market is in the long-run equilibrium, the market equilibrium price is P , and each firm produces q units of good.The government decides to impose a tax of size T per unit of good.a) After the tax is imposed, how would the market equilibrium price and quantity change in the short-run? How does the quantity produced by each firm change in the short-run? Illustrate your answers using a diagram....

Consider the monopolistically competitive market structure, which has some features of a perfectly competitive market and...

Consider the monopolistically competitive market structure, which has some features of a perfectly competitive market and some features of a monopoly. Complete the following table by indicating whether each attribute characterizes a perfectly competitive market, a monopolistically competitive market, both, or neither. Check all that apply. Attributes Perfectly Competitive Market Monopolistically Competitive Market Many sellers Easy entry Few sellers Price equals average total cost in the long run

Consider a perfectly competitive market with demand and supply Qd = 3360 – 4P and Qs...

Consider a perfectly competitive market with demand and supply Qd = 3360 – 4P and Qs = -240+6P a . Find the equilibrium price and quantity in the market. b. Now suppose we impose a tax of $20 per unit on the supplier. What is the new supply curve, including the tax? c. What are the new equilibrium price and quantity in the market with the tax? d. How much of the tax incidence falls on the consumers in the...

1. Consider a Perfectly Competitive market where the demand is given by P = 6000 –...

1. Consider a Perfectly Competitive market where the demand is given by P = 6000 – 4Q and the supply is given by P = Q. a. Calculate the equilibrium price, quantity, total Consumer Surplus, and total Producer Surplus. Show all calculations. b. Suppose this market now is controlled by a single-price monopolist whose marginal cost function is MC = Q. Determine this firm’s marginal revenue function, then calculate its profit-maximizing quantity, price, the total Consumer Surplus, and the total...

Consider the perfectly competitive market for dogs. Suppose that the demand curve for dogs is given...

Consider the perfectly competitive market for dogs. Suppose that the demand curve for dogs is given by MBP = P = 200 - Q, and the supply curve for dogs is given by MCP = P = 40 + Q. (6 points) How many dogs are bought and sold at equilibrium? (6 points) Suppose, to begin with, that dog buying and selling only affects parties that engage in it (i.e., buyers and sellers of dogs). How does the social marginal...

Consider a perfectly competitive market, with demand given by and supply given by The government imposes...

Consider a perfectly competitive market, with demand given by and supply given by The government imposes a per unit tax of T=2. What is the new producer surplus after the imposition of the tax? Supply = 20- Q, Demand P = Q 18 27 9 None of the other answers is correct. 81

Question