Question
In: Economics
Suppose that dry cleaning market is perfectly competitive. In a market for dry cleaning, the inverse...
- Suppose that dry cleaning market is perfectly competitive. In a market for dry cleaning, the inverse market demand function is given by P = 200 -3 Q , and the (private) total cost of production for the aggregation of all dry-cleaning firms is given by CQ= Q2+12Q+3 . Finally, the pollution generated by the dry-cleaning process creates external damages given by the marginal external cost curve MEC = Q . Derive the marginal revenue function MR(Q) and marginal cost function MC(Q).
- Without any regulation, what are the profit-maximizing price and quantity
- Determine the socially efficient price and quantity.
- Suppose now that the market is monopolistic instead of perfectly competitive. What are the socially efficient price and quantity?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Suppose that dry cleaning market is perfectly competitive. In a market for dry cleaning, the...
Suppose that dry cleaning market is perfectly competitive. In a
market for dry cleaning, the inverse market demand function is
given by P = 300 -3 Q and the (private) marginal cost of
production for the aggregation of all dry-cleaning firms is given
by MC = 15 + 2Q Finally, the pollution generated by the
dry-cleaning process creates external damages given by the marginal
external cost curve MEC = Q.
Without regulation, what are the profit-maximizing price and
quantity?...
Suppose diesel fuel is sold in an unregulated perfectly competitive market, where the inverse market supply...
Suppose diesel fuel is sold in an unregulated perfectly
competitive market, where the inverse market supply curve is P = 1
+ 0.01QS and the inverse market demand curve is P = 8– 0.04QD where
the quantity is in billions of gallons per year and the price is in
dollars per gallon. Suppose that the external marginal cost of
diesel fuel depends on the quantity of diesel fuel consumed as
follows: EMC = 0.01Q a. What is the market equilibrium...
1. The market for ice cream is a perfectly competitive market and has the following inverse...
1. The market for
ice cream is a perfectly competitive market and has the following
inverse demand curve and inverse supply curve, where p is $ per
gallon and Q is billions of gallons of ice cream per year: Demand:
p = 16 – 5Q; Supply: p = 4 + 2.5Q
a. Provide a graph
of the market for ice cream. Calculate and show the equilibrium
price and quantity (in billions of gallons) in the market.
b. Calculate the
consumer...
The market for ice cream is a perfectly competitive market and has the following inverse demand...
The market for ice cream is a
perfectly competitive market and has the following inverse demand
curve and inverse supply curve, where p is $ per gallon and Q is
billions of gallons of ice cream per year: Demand: p = 16 – 5Q;
Supply: p = 4 + 2.5Q
a. Provide a graph
of the market for ice cream. Calculate and show the equilibrium
price and quantity (in billions of gallons) in the market.
b. Calculate the
consumer surplus...
Suppose there is a perfectly competitive market for curry puffs. The perfectly competitive equilibrium price in...
Suppose there is a perfectly competitive market for curry puffs.
The perfectly competitive equilibrium price in this market is RM5
per puff. The perfectly competitive equilibrium quantity is 5,000
curry puffs. (a) Using a diagram, illustrate the perfectly
competitive equilibrium in the market for curry puffs. Clearly
label the areas of consumer surplus, producer surplus, and social
surplus at this equilibrium. [3 marks]
(b) Suppose that the government introduces a price floor for
curry puffs at RM7 each.
Note: Use...
Assume that the market for bottled polar iceberg water is perfectly competitive, with market inverse demand...
Assume that the market for bottled polar iceberg water is
perfectly competitive, with market inverse demand given by ? ?(?) =
50 − 0.005?, price measured in dollars per bottle, and ? measured
in hundreds of bottles. The short-run marginal cost curve for a
typical bottled polar iceberg water producing firm is ??? (?) = 5 +
0.025?? , with ??? in dollars per bottle and ?? in hundreds of
bottles. 1.a. If there are 50 identical firms, determine the...
Assume that the market for bottled polar iceberg water is perfectly competitive, with market inverse demand...
Assume that the market for bottled polar iceberg water is
perfectly competitive, with market inverse demand given by ? ?(?) =
50 − 0.005?, price measured in dollars per bottle, and ? measured
in hundreds of bottles. The short-run marginal cost curve for a
typical bottled polar iceberg water producing firm is ??? (?) = 5 +
0.025?? , with ??? in dollars per bottle and ?? in hundreds of
bottles. 1.a. If there are 50 identical firms, determine the...
A perfectly competitive market exists for wheat. The inverse demand is P = 200 − Q...
A perfectly competitive market exists for wheat. The inverse
demand is P = 200 − Q where P is the price of wheat and Q is the
total quantity of wheat. The private total cost for the unregulated
market is C = 50 + 80Q + 0.5Q2 . The production of wheat creates an
externality where the total external cost is E = 0.5Q2 .
(a) Solve for the unregulated competitive equilibrium of wheat
and the socially optimal level of...
Suppose we are studying the market for beer; the market for candy is perfectly competitive. There...
Suppose we are studying the market for beer; the market for
candy is perfectly competitive. There are two types of firms that
produce beer, Type A firms and Type B firms. The cost curve of type
A firm is represented by CA(y) = y^2 + 5, and the cost curve of a
type B firm is represented by CB(y) = ((y^2) / 2 ) + 10. In the
short-run, there are 10 Type A firms in the market, and 15...
Suppose the market for apples is perfectly competitive. a) Suppose the government wants to boost the...
Suppose the market for apples is perfectly competitive. a)
Suppose the government wants to boost the income of producers.
Explain how they could use a minimum price (a price floor) or price
support to do this. b) Which policy would producers prefer?
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