1. If each competitive firm in an industry has the short run cost function TC=50+5q+q2, and...
1. If each competitive firm in an industry has the
short run cost function TC=50+5q+q2, and MC=5+2q. The market price
is $35.
a. What is the
profit maximizing output level for each firm?
b. What are the profits?
c. Now, suppose that fixed costs were $250 instead of $50, so the
firm faces the short run cost function TC=250+5q+q2. How does this
change affect the firm’s output decision and profits? Should the
firm continue to operate in the short run?
Homework Answers
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1. If each competitive firm in an industry has the
short run cost function TC=50+5q+q2, and...
A firm operates in a perfectly competitive industry. Suppose it has a short run total cost...
A firm operates in a perfectly competitive industry. Suppose it has a short run total cost function given by TC = 1200 + 2Q + 0.03Q2. If the market price is $38, what is the firm’s profit maximizing quantity?
1. Suppose that a firm operating in perfectly competitive industry has short-run cost function given by...
1. Suppose that a firm operating in perfectly competitive industry has short-run cost function given by C(q) = 5+2q+9. The market price is $10. (a) What is the profit-maximizing output level for this firm? (b) What is the firm's total revenue and profits at the profit-maximizing output? (c) What is the minimum price at which the firm will produce a positive level of output in the short run?
38) Assume the following inverted demand function of a firm in the short run: P =...
38) Assume the following inverted demand function of a firm in the short run: P = 50 - .5Q. Now assume the total cost function of this firm is : TC = 50 + 100Q - Q2 The above cost function yields the MC function as 100- 2Q (a). Calculate the profit maximizing price and output of this firm. (Hint: Obtain the MR first). (b). Is this firm earning a profit or loss in the short run? Explain. Is this...
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) of TC(a) 60+4q+2q2 and a marginal cost function (MC) of MC(q) = 4 + 4q. At the given market price (P) of $20, the firm is producing 4.00 units of output. Is the firm maximizing profit?V What quantity of output should the firm produce in the long run? The firm should produce unit(s) of output. (Enter your response as an integer.)
2. Profit maximization. Suppose that each perfectly competitive firmi in an industry has the short-run cost...
2. Profit maximization. Suppose that each perfectly competitive firmi in an industry has the short-run cost function TC 20 +4q+, and the market price is S20. What is the profit-maximizing output level for each firm? What is the total revenue? What are the profits?
3. Assume that the short run total cost function of a competitive firm is given by...
3. Assume that the short run total cost function of a competitive firm is given by TC(y) = y2-6y + 70 and MC(y)=2y-6 where y is the firm’s output. If the market price is $10, what will be the maximum profits of this firm in the short run? Will he stay in business in SR? Why or why not?
A price-taker firm has a short run total cost function given by: TC=1.2+5q+0.3q2. Calculate the short...
A price-taker firm has a short run total cost function given by: TC=1.2+5q+0.3q2. Calculate the short run price at which this profit- maximizing, price taker would shutdown in the short run. (Do not include a "$" sign in your response.) Answer:
The market price is p=50 3. Consider a competitive firm with total costs given by TC(q)...
The market price is p=50
3. Consider a competitive firm with total costs given by TC(q) = 100 + 10q+q? (e) Graph the ATC, AVC, MC, and MR curves in a single graph, and indicate the profit maximizing level of output. If there are profits, shade the region corre- sponding to profit and label it. (f) If fixed costs increase from 100 to 500, what happens to the profit maximizing level of output, TR, TC, and a? (g) If fixed...
Numerical Example A representative firm is operating in a perfectly competitive industry. The firm’s total cost,...
Numerical Example A representative firm is operating in a perfectly competitive industry. The firm’s total cost, TC, is given by the equation TC = 50 + 5q2 , where q is output. Based on this equation, the marginal cost, MC, is 10q. 1. If the output price is $100, what is the short-run profit-maximizing output? 2. How much profit does this firm make at that level of output? 3. What do you expect to happen in the market in the...
1. Suppose a perfectly competitive firm has a cost function described by TC = 200Q +...
1. Suppose a perfectly competitive firm has a cost function described by TC = 200Q + Q 2 + 225 Each firm’s marginal revenue is $240. a. Find the profit maximizing level of output. b. Is this a short-run or long-run situation? How do you know? c. Assuming that this firm’s total cost curve is the same as all other producers, find the long-run price for this good.
1. Suppose that a firm operating in perfectly competitive industry has short-run cost function given by C(q) = 5+2q+9. The market price is $10. (a) What is the profit-maximizing output level for this firm? (b) What is the firm's total revenue and profits at the profit-maximizing output? (c) What is the minimum price at which the firm will produce a positive level of output in the short run?
A firm produces a product in a competitive industry and has a total cost function (TC) of TC(a) 60+4q+2q2 and a marginal cost function (MC) of MC(q) = 4 + 4q. At the given market price (P) of $20, the firm is producing 4.00 units of output. Is the firm maximizing profit?V What quantity of output should the firm produce in the long run? The firm should produce unit(s) of output. (Enter your response as an integer.)
2. Profit maximization. Suppose that each perfectly competitive firmi in an industry has the short-run cost function TC 20 +4q+, and the market price is S20. What is the profit-maximizing output level for each firm? What is the total revenue? What are the profits?
A price-taker firm has a short run total cost function given by: TC=1.2+5q+0.3q2. Calculate the short run price at which this profit- maximizing, price taker would shutdown in the short run. (Do not include a "$" sign in your response.) Answer:
The market price is p=50
3. Consider a competitive firm with total costs given by TC(q) = 100 + 10q+q? (e) Graph the ATC, AVC, MC, and MR curves in a single graph, and indicate the profit maximizing level of output. If there are profits, shade the region corre- sponding to profit and label it. (f) If fixed costs increase from 100 to 500, what happens to the profit maximizing level of output, TR, TC, and a? (g) If fixed...
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