A company in perfect competition has the total cost function:

C(q) = 50 + 0.5 q + 0.08 q²

a. Determine what is the long-run equilibrium price level and the corresponding output of the firm..

b. If the company experiences a technological improvement that reduces its costs by 25%, what is the equilibrium quantity of the company in the short term if the market price is the one found in point a.

Suppose a firm has the following total cost function TC = 200+2q2 . If price equals $30, what is the firms’ profit maximizing output? What are its short-run profits?

Suppose Rob is currently producing 10,000 hamburgers per month at a total cost of ​$2,000.00. What is his average total cost of​ production?  ​$______ . ​(Enter a numeric response using a real number rounded to two decimal​ places.)

A firm’s total cost curve is T C = Q 3 – 6 0 Q 2 + 91 0 Q + 15 0. Its marginal cost is 3 Q 2 – 12 0 Q + 91 0. Find the firm’s fixed cost, variable cost, average total cost, and average variable cost. Find the output level at which average variable cost is minimized.

1. Assume the following: sales price is $9, output is 5,000 units, average total cost is $12, marginal cost is $9, and average variable cost is $9.50. What should the firm do and why?

D. Continue to produce because price can be increased

A. Continue to operate and reduce costs to earn a profit

C. Shut down because the price is less than the average variable cost

B. Shut down because the firm’s earning a loss of $15.00

2. For a firm in a perfectly competitive market, which of the following is true?

C. Its short-run supply curve is the marginal cost curve above the average variable cost curve.

A. Its short-run supply curve is vertical

D. Its short-run supply curve is negatively sloped.

B. Its short-run supply curve is the average variable cost curve.

3. If a profit-maximizing, perfectly competitive firm is producing at a point on the marginal cost curve between average variable cost and average total cost, it should do which of the following?

C. Continue producing in the short run

A. Shut down in the short run

D. Increase the fixed costs

B. Leave the market in the short run

4. For the perfectly competitive, profit-maximizing firm, ____________.

C. P > MR > MC

A. P = MR > MC

B. P > MR = MC

D. P = MR = MC

1. Assume the following: sales price is $9, output is 5,000 units, average total cost is $15, marginal cost is $9, and average variable cost is $7.50. What should the firm do and why?

A. Shut down, because average total cost is greater than price

B. Shut down, because of a loss of $5,000

D. Continue to produce, because price is greater than average total cost

C. Continue to produce, because price is greater than average variable cost

2. The price charged by a firm in the perfectly competitive market is set by the __________.

D. firm itself

A. market

B. government

C. consumers acting in unison

3. Any firm that cannot cover its variable costs should __________ in the short run and __________in the long run.

D. shut down; leave the industry

C. shut down; decrease output

B. decrease output; leave the industry

A. decrease output; decrease output

4. Which of the following markets is closest to perfect competition?

A. The market for rough diamonds, where DeBeers controls the bulk of production.

C. The potato market, where many producers grow similar produce, frequently in Idaho.

D. The local water provider, where there are many similar providers throughout the country

B. The craft beer market, where there are thousands of small local producers each selling their own specialized brand.

Suppose that there are 5 hamburger stands each with identical short-run total cost curves described as:  

SRTC=16+(Q²/100)

where Q is the number of hamburgers each stand produces per day. If the daily market demand for this perfectly competitive market is Q_d=900-200P, how much profit will each stand make per day (if any)?

A farmer is considering producing turfgrass seed. She estimates the total fixed cost (which are

difficult to allocate) to be about $750,000 and when 20,000 bags are produced the variable cost is $1,500,000.

a) How many bags of seed must the farmer sell to break even? Assuming the producer can sell the seed for $125 per bag.

b) What is the breakeven price? The farmer indicates she will probably sell about 30,000 bags.

c) Your insurance firm has told you that your insurance will be going up by 16,000 in the industry. Show the effect of this increase in the breakeven values.

d) Describe three uses of the breakeven analysis concept.

When a firm's demand curve is tangent to its average total cost curve, economic profits are zero and the firm will exit the industry in the long run since firms are unwilling to operate at zero economic profit.

true or false

If the gain from a product-variety externality is less than the loss from a business-stealing externality, then there are likely to be too many firms in a monopolistic competitive market.

true or false

Although the monopolistically competitive firm maximizes profits at the output level where marginal revenue equals marginal cost, the firm’s price exceeds marginal cost

true or false

If firms in a monopolistic competitive market are earning economic profits in the short run, then, in the long run, new firms will enter and existing firms will lose customers to the new entrants.

true or false