You are the owner of a high-end shoe factory called Rike. There are no barriers to...

You are the owner of a high-end shoe factory called Rike. There are no barriers to entry in the shoe market. But not only that: you realized that while you were attending online lecture last week you shared your shoe building process with everyone in the class. The people you once thought of as friends could now turn into your greatest enemies. It’s a bummer, but those are part of the risks of online lectures.

Luckily your favorite economics class has proven useful once again and has enlightened you with the following information to guide your business decisions:

Q （demand）=2,500–5P

Q（supply）=95P

TC=4Q^2 -15Q+76

Where QD is the total market demand for shoes, QS the total market supply for shoes, TC your

firm’s total cost function.

A. (10 points) Find the market equilibrium price and quantity. Graphically illustrate the equilibrium.

B. (15 points) Find the output your firm supplies and the total profit/loss you make. On a new graph below illustrate both the equilibrium and profit/loss you make.

C. (10 points) Find the number of firms that are active in the industry at market equilibrium.

D. (10 points) Calculate the price below which you will not produce any output in the long-run

Solutions

Expert Solution

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Rahul Sunny answered 1 year ago

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