Question

In: Economics

12. Suppose that a farmer is a price taker for potato sales with cost functions given...

12. Suppose that a farmer is a price taker for potato sales with cost functions given by T C = 0.1q 2 + 2q + 100 MC = 0.2q + 2 The firm’s supply curve is given by

(a) q = 2P − 5

(b) q = 5P − 10

(c) q = 1/2P + 2

(d) q = 10P − 2

Consider the cost functions of Frank the farmer given above. If P = $6, the profit-maximizing level of output is

(a) 80

(b) 40

(c) 20

(d) 10

Expert Solution

Answer)

1) q = 5P - 10

So, option B is correct.

2) profit maximising level of output --

q = 5 P - 10

q = 5(6) - 10

q = 20

So, option C is correct.

If you have any doubts, please comment...

Rahul Sunny answered 2 years ago

In the U.S. agribusiness industry the farmer is a price taker and the businesses selling to...

In the U.S. agribusiness industry the farmer is a price taker and the businesses selling to and buying from farmers are price makers. True or False?

Suppose that a price-taker firm has a marginal cost function given by: MC= 20+0.2q. The firm...

Suppose that a price-taker firm has a marginal cost function given by: MC= 20+0.2q. The firm could join a cartel in its industry and agree to a quota of 10 units. The collusion drives the price of the good from $24.55 to $50.00. Suppose that if the firm cheats on the cartel, it has no effect on the price. Calculate the producer surplus of this firm when they cheat on the cartel.

A price-taker firm has an average total cost function given by ATC = 972 / q...

A price-taker firm has an average total cost function given by ATC = 972 / q + 5 + 3q . Calculate the price at which the firm would zero profits.

Suppose price-taking firms have cost functions given by C(q) = 90 + 5q + 0.025q2. a....

Suppose price-taking firms have cost functions given by C(q) = 90 + 5q + 0.025q2. a. What are the equations of marginal costs and average costs? b. How much would the firm produce at prices of $9, $10, $11, and $12? c. How much profit would the firm earn at prices of $9, $10, $11, and $12? d. Graph the MC, AC. Indicate the profits at a price of $9 per unit. e. What price would be charged in the...

1. Suppose price-taking firms have cost functions given by C(q) = 90 + 5q + 0.025q...

1. Suppose price-taking firms have cost functions given by C(q) = 90 + 5q + 0.025q . What are the equations of marginal costs and average costs? How much would the firm produce at prices of $9, $10, $11, and $12? How much profit would the firm earn at prices of $9, $10, $11, and $12? Graph the MC, AC. Indicate the profits at a price of $9 per unit. What price would be charged in the perfect competitive equilibrium?...

Compare price taker firms with price searcher firms in terms of marginal cost and marginal revenue....

Compare price taker firms with price searcher firms in terms of marginal cost and marginal revenue. How would each type firm use those concepts in decision making?

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...

Suppose a price taker market has been at equilibrium until an increase in demand increases the...

Suppose a price taker market has been at equilibrium until an increase in demand increases the market price. In the future, ceteris paribus, we should expect to see a. the price stay at the higher level b. the price goes even higher c. the price fall d. costs increase e. costs decline If a new technology increases productivity in a price taker market, we should expect to see at the next equilibrium a. a higher price b. a lower price...

. Suppose a factor price taker purchases one unit of factor X for $10. At what...

. Suppose a factor price taker purchases one unit of factor X for $10. At what price would it purchase the second unit, and what would marginal factor cost (MFC) equal? It would purchase the second unit for $10, and MFC equals $10. There is not enough information to know what it would purchase the second unit for, and thus we do not know what MFC equals. It would purchase the second unit for $10, but there is not enough...

If the unit sales price is $12, the unit variable cost is $7.00 and fixed costs...

If the unit sales price is $12, the unit variable cost is $7.00 and fixed costs are $125,000; what is the, break-even quantity in # of units? ___________________________________ Please Show steps