Question
In: Economics
A local microbrewery has total costs of production given by the equation C(Q) = 500 +...
A local microbrewery has total costs of production given by the equation C(Q) = 500 + 10Q + 5Q 2 . The market demand for beer is given by the equation Q = 105 – (1/2)P. The firm operates in a perfectly competitive market.
a. Write the equations showing the brewery's average total cost and average variable cost, average fixed cost, and marginal cost, each as a function of quantity (Q).
b. What is the break-even price and break-even quantity for this firm in the short run?
c. What is the shut-down price and shut-down quantity for this firm in the short run?
d. If the market price of the output is $50, how many units will this firm produce?
e. Given a market price of $50, how many firms are in this market?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
A local microbrewery has total costs of production given by the equation C(Q) = 500 +...
A local microbrewery has total costs of production given by the
equation C(Q) = 500 + 10Q + 5Q2. The market demand for beer is
given by the equation Q = 105 – (1/2)P. The firm operates in a
perfectly competitive market.
a. Write the equations showing the brewery's average total cost
and average variable cost, average fixed cost, and marginal cost,
each as a function of quantity (Q). b. What is the break-even price
and break-even quantity for this...
If the consumption function is given by the equation C = 500 +0.5Y, the production...
If the consumption function is given by the equation C = 500 +
0.5Y, the production function is Y = 50K0.5L0.5, where K = 100 and
L = 100, then C equals:3,000.5,000.2,500.1,000.
. A natural monopolist has the total cost function C(Q) = 500 + 5Q and faces...
. A natural monopolist has the total cost function C(Q) = 500 +
5Q and faces the inverse demand curve P = 100 – Q
a) Find the monopolist’s price, quantity, profits, consumer
surplus and deadweight loss if the monopolist is not constrained by
a regulator (you probably want to draw a picture to help you answer
CS and DWL)
P = _________ Q = _________ π = _________ CS = ¬_________ DWL =
_________
b) A regulator constrains the...
Marginal costs of production are given by the following function: MC(Q) = 4 − Q Q...
Marginal costs of production are given by the following
function: MC(Q) = 4 − Q Q ≤ 2 ,2Q − 2 Q > 2 (a) Plot the
marginal cost curve. (b) Give the expressions for V C(Q) and AV
C(Q). (c) Plot AV C(Q) on the plot from (a). (d) Give the
expression for the supply curve of this firm. (e) Is it possible to
find a different MC(Q) function that gives rise to the same supply
curve? If yes,...
Assume that GDP (Y) is 10,000. Consumption (C) is given by the equation C = 500...
Assume that GDP (Y) is 10,000. Consumption (C) is given by the
equation C = 500 + 0.8(Y – T). Investment (I) is given by the
equation I = 2,000 – 50r, where r is the real rate of interest in
percent. Taxes (T) are 500 and government spending (G) is also 500.
a. What are the equilibrium values of C, I, and r? (Show your work)
(4.5 marks) b. What are the values of private saving, public
saving, and...
A monopolist has its total costs (TC ) of production given in Table 4. The (inverse)...
A monopolist has its total costs (TC ) of production given in
Table 4. The (inverse) demand curve it faces in the market is
described by this equation: P = a − bQ = 5, 000 − (40)Q.
Q
TC
Q
TC
0
800
21
13345.4
`1
1181.4
22
14827.2
2
1531.2
23
16453.8
3
1857.8
24
18233.6
4
2169.6
25
20175
5
2475
26
22286.4
6
2782.4
27
24576.2
7
3100.2
28
27052.8
8
3436.8
29
29724.6
9
3800.6...
A monopolist has its total costs (TC ) of production given in Table 3. The (inverse)...
A monopolist has its total costs (TC ) of production
given in Table 3. The (inverse) demand curve it faces in the market
is described by this equation:
P = a − bQ = 3, 000 − (31.15)Q.
Table 3: Total Costs for a Monopolist
Q
TC
Q
TC
0
800
21
6243.2
1
1131.2
23
6977.6
2
1409.6
23
7810.4
3
1642.4
24
8748.8
4
1836.8
25
9800
5
2000
26
10971.2
6
2139.2
27
12269.6
7
2261.6
28...
A production function is given by q = L1/3K1/3 and a total cost function is given...
A production function is given by q = L1/3K1/3 and a total cost
function is given by TC = q2/3. Under what conditions could these
belong to the same firm?
A production function is given by q = L1/5K1/5 and a total cost function is given...
A production function is given by q = L1/5K1/5 and a total cost
function is given by TC = q2/5. Under what conditions could these
belong to the same firm?
Suppose that a given firm has the following total cost and marginal cost functions: C(q) =...
Suppose that a given firm has the following total cost and
marginal cost functions: C(q) = 50+5q+ 5q 2 , MC(q) = 5+10q. 2
(a) Write down expressions for the fixed cost, average fixed
cost, average total cost and average variable cost associated with
this production function. In addition, identify the quantity at
which average total cost is minimized.
(b) Consider the restaurant industry. Provide an example of a
fixed cost, variable cost, and sunk cost. Be sure to justify...
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