An industry is perfectly competitive. Each firm is identical and has a total cost function T...

An industry is perfectly competitive. Each firm is identical and has a total cost function T C(q) = 50 + 2q^2 . The market demand function for products is Q = 1,020 − P, where P is the market price.

(a) Below, graph the firm’s short-run supply curve and provide a brief explanation.

q*=____ Q*=____ P*=______. N*=______

(b) What is the long-run equilibrium firm quantity (q), market quantity (Q), price, and number of firms (N)?

q*=____ Q*=____ P*=______. N*=______

(c) Suppose that the market for products is actually controlled by a monopoly. Find the equilibrium price and quantity in the market. What will monopoly profits be?

Q*=____. P*=_____. Profit=______

Expert Solution

Rahul Sunny answered 1 year ago

In a perfectly competitive industry, each firm has a total cost function of TC = 400...

In a perfectly competitive industry, each firm has a total cost function of TC = 400 + 10q + q2 and a marginal cost curve of MC = 10 + 2q if it produces a positive quantity of output q. If a firm produces zero output it has no costs. The market price is $50. Which statement is true?] a. Each firm produces 20 units of output; the industry will require entry to reach its long-run equilibrium. b. Each firm...

Each firm in a perfectly competitive industry A. produces a good that is identical to that...

Each firm in a perfectly competitive industry A. produces a good that is identical to that of the other firms. B. has control over at least one unique resource to separate themselves from their competitors. C. attains economies of scale so that its efficient size is large compared to the market as a whole. D. produces a good that is slightly different from that of the other firms. E. has an important influence on the market price of the good...

A competitive industry includes a large number of identical firms. Each firm has the total cost...

A competitive industry includes a large number of identical firms. Each firm has the total cost function TC(q) = q2 + 25. It can be shown that each firm’s marginal cost function is MC(q) = 2q. a. Derive an equation for a single firm’s supply equation.. b. Derive the individual firm’s average total cost equation. Show your work. Now suppose the market price of the firms’ output is $8. c. What will each firm’s profit-maximizing output be equal to? d....

A perfectly competitive industry has a large number of potential entrants. Each firm has an identical...

A perfectly competitive industry has a large number of potential entrants. Each firm has an identical cost structure such that long-run average cost is minimized at an output of 20 units ( q i = 20 ) . The minimum average cost is $10 per unit. Total market demand is given by Q = D ( P ) = 1 , 500 - 50 P . What is the industry’s long-run supply schedule? What is the long-run equilibrium price (...

A perfectly competitive firm has a total revenue function of TR = 90Q and cost function...

A perfectly competitive firm has a total revenue function of TR = 90Q and cost function of TC = 30Q2 + 50. i. Determine the price the firm should charge and the quantity of output that it should produce to maximize profit. ii. if there are 20 identical firms in the market, what will be the perfectly competitive price and total output produced?

A firm produces a product in a competitive industry and has a total cost function TC...

A firm produces a product in a competitive industry and has a total cost function TC = 50 + 4Q +2Q² and MC = 4 + 4Q. At the given market price of $20, the firm is producing 5 units of output. Is the firm maximizing profit ? What quantity of output should the firm produce in the long run?

All firms in a perfectly competitive industry have a long-run total cost function of T C(Q)...

All firms in a perfectly competitive industry have a long-run total cost function of T C(Q) = 36Q − 4Q2 + 2Q3. The market demand curve is QD = 640 − 10P. The price of inputs is not affected by the industry output. a) Find the (long-run) average cost and marginal cost curves. b) What quantity will each firm produce in the long run? c) What will be the market price in the long run? d) What will be the...

Assume that a firm in perfectly competitive industry has the following total cost schedule: Q TC...

Assume that a firm in perfectly competitive industry has the following total cost schedule: Q TC 10 110 15 150 20 180 25 225 30 300 35 385 40 480 Calculate the marginal cost and average cost schedule for the firm. If the prevailing market price is $17 per unit, how many units will be produced and sold? What at the profits per unit? What are the total profits? Is the industry in long-run equilibrium at this price?

Cardboard boxes are produced in a perfectly competitive market. Each identical firm has a short-run total...

Cardboard boxes are produced in a perfectly competitive market. Each identical firm has a short-run total cost curve of TC = 2Q^3 - 12Q^2 + 10Q + 20 where quantity is measured in thousands of boxes per week. The marginal cost of production is given by MC = 6Q^2 -24Q + 10. Calculate the price below which a firm in the market will not produce any output (the shut-down price).

Suppose there is a perfectly competitive industry where all the firms are identical with identical cost...

Suppose there is a perfectly competitive industry where all the firms are identical with identical cost curves. Furthermore, suppose that a representative firm’s total cost is given by the equation TC = 120 + q2 + 2q where q is the quantity of output produced by the firm. You also know that the market demand for this product is given by the equation P = 1200 – 2Q where Q is the market quantity. In addition you are told that...

Question