Question

In: Economics

An industry producing chemicals shows the following marginal cost function: MgCp = 5+2X Where X is...

An industry producing chemicals shows the following marginal cost function: MgCp = 5+2X

Where X is the quantity produced. The demand for X is represented by the following function: P = 20 – 2X.

Assume that the market is perfectly competitive and unregulated.

A) Compute the equilibrium price and equilibrium quantity, graph.

Solutions

Expert Solution

A perfectly competitive market will produce at the point where price is equal to marginal cost. So, in equilibrium,

Price = MARGINAL COST

20 - 2X = 5 + 2X

20 - 5 = 2X + 2X

4X = 15

X = 15/4 = 3.75 is the answer.

Price = 20 - 2X

= 20 - 2(3.75)

= 20 - 7.5 = 12.5 is the answer.

In a perfectly competitive market, the price remains constant which is shown by a horizontal line in the graph below and in this case the marginal cost is increasing which is shown by the upward sloping marginal cost curve.

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

An industry producing chemicals shows the following marginal cost function: MgCp = 5+2X Where X is...
An industry producing chemicals shows the following marginal cost function: MgCp = 5+2X Where X is the quantity produced. The demand for X is represented by the following function: P = 20 – 2X. Assume that the market is perfectly competitive and unregulated. In the productive process the firms throw their wastes throw their wastes in a river, the society is facing a cost for the firm’s actions. The social marginal cost is given by the following function MgCs =...
An industry producing chemicals shows the following marginal cost function: MgCp = 5+2X Where X is...
An industry producing chemicals shows the following marginal cost function: MgCp = 5+2X Where X is the quantity produced. The demand for X is represented by the following function: P = 20 – 2X. Assume that the market is perfectly competitive and unregulated. In the productive process the firms throw their wastes throw their wastes in a river, the society is facing a cost for the firm’s actions. The social marginal cost is given by the following function MgCs =...
1) The marginal cost function associated with producing x widgets is given by C'(x)= -0.8x+75 where...
1) The marginal cost function associated with producing x widgets is given by C'(x)= -0.8x+75 where C'(x) is measured in dollars/unit and x denotes the number of widgets. Find the total cost C(x) incurred from producing the 11th through 05th units of the day. The options are: 2040 2030 2020 2000 2050 a) The Math Club has determined that in order to successfully tutor x Math 2 students in preparation for the second homework, the price per student p(x) in...
1.If the firm is producing at a quantity of output where marginal cost exceeds marginal revenue,...
1.If the firm is producing at a quantity of output where marginal cost exceeds marginal revenue, then ________. (there can be multiple answers.) A)the firm should reduce production B)each marginal unit adds profit by bringing in more revenue than its cost C)the firm's perceived demand will shift to the left D)the excess profit would attract additional competition 2.In what way(s) is a monopolistically competitive firm inefficient?(there can be multiple answers.) A) It does not produce at the minimum of its...
Consider the root of function f(x) = x 3 − 2x − 5. The function can...
Consider the root of function f(x) = x 3 − 2x − 5. The function can be rearranged in the form x = g(x) in the following three ways: (a) x = g(x) = x3 − x − 5 (b) x = g(x) = (x 3 − 5)/2 (c) x = g(x) = thirdroot(2x + 5) For each form, apply fixed-point method with an initial guess x0 = 0.5 to approximate the root. Use the error tolerance = 10-5 to...
Given the following rational function:             F(X) = (2X^2 - 20) / [( X - 5 )^2]...
Given the following rational function:             F(X) = (2X^2 - 20) / [( X - 5 )^2] Find all horizontal and vertical asymptotes Find the first derivative of F(X) and simplify Find the critical values for X and determine if they are at a maximum or minimum, using the First Derivative Sign Test. Find the Second Derivative and Use it to confirm your answers to part c. You may keep the 2nd derivative in “rough” form and simply substitute in the...
Find the cost function if the marginal cost function is given by C' (x) = x^1/3...
Find the cost function if the marginal cost function is given by C' (x) = x^1/3 +9 and 27 units cost ​$415. C(x) =
For the following exercises, the cost of producing x cellphones is described by the function C(x) = x2 − 4x + 1000. Find the approximate marginal cost, when 15 cellphones have been produced, of producing the 16th cellphone.
For the following exercises, the cost of producing x cellphones is described by the function C(x) = x2 − 4x + 1000.Find the approximate marginal cost, when 15 cellphones have been produced, of producing the 16th cellphone.
1. Firm X is producing the quantity of output at which marginal revenue equals marginal cost....
1. Firm X is producing the quantity of output at which marginal revenue equals marginal cost. It is earning A. a positive economic profit. B. an economic loss. C. a normal profit. D,There is not enough information to answer the question. 2. A perfectly competitive firm will always maximize short-run profits by producing the level of output where the average total cost is minimized. A.True B.False
If the total cost function for a product is C(x) = 8(x + 5)^3 dollars, where...
If the total cost function for a product is C(x) = 8(x + 5)^3 dollars, where x represents the number of hundreds of units produced, producing how many units will minimize average cost? x = hundred units Find the minimum average cost per hundred units. $
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT