2. Consider a competitive market where there are two types of firms, Type A and Type B, with total cost functions TC(q) = 2+4q+q² TCB (q) = 8+4q+6q² (a) Derive the short-run supply curve for each firm type (b) What is the short-run market supply, if there are 6 Type A firms, and 12 Type B firms? (c) What is total quantity produced when p=10? (d) How does your answer at (c) change if we consider long run supply rather than short run? Here, assume again that p=10 and that there are 6 Type A firms and 12 Type B firms.

2. Consider a competitive market where there are two types of firms, Type A and Type B, with total cost functions TC(q) = 2+4q+q² TCB (q) = 8+4q+6q² (a) Derive the short-run supply curve for each firm type (b) What is the short-run market supply, if there are 6 Type A firms, and 12 Type B firms? (c) What is total quantity produced when p=10? (d) How does your answer at (c) change if we consider long run supply rather than short run? Here, assume again that p=10 and that there are 6 Type A firms and 12 Type B firms.

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter9: Price Takers And The Competitive Process

Section: Chapter Questions

Problem 8CQ

See similar textbooks

Similar questions

31) What is total fixed cost at the profit-maximizing quantity? 32) When the process of entry and exit has ended in a competitive market, are firms’ profits positive, negative, or zero? Why is this true? 33) When a single firm can supply a good or service to an entire market at a lower cost than could two or more firms, the industry is known as a?
= = 41. Suppose that the market for cigarettes is initially in equilibrium and is perfectly competitive. The demand curve can be expressed as P 60Qd; the supply curve can be expressed as P 0.5Qs. Quantity is expressed in millions of boxes per month. What are the amount traded and the price for this market? a) Q = 40; P = 20 b) Q = 20; P = 40 c) Q = 30; P = 30 d) Q = 30; P = 15
The figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right). Assume that all firms in this market, including the potential entrants, have identical cost curves. Initially, the market is in equilibrium at point A. Price 6 Cost 17 D 8 10 12 Quantity ATC O the price is $1.00 and the quantity sold is 6 units O the price is $3.00 and the quantity sold is 2 units O the price is $2.00 and the quantity sold is 2 units O the price is $2.00 and the quantity sold is 4 units Quantity Refer to the figure above. Suppose that the market has reached the long-run equilibrium. Then, due to news of the product's defects and recall, the demand falls by 2 units at each price. The market will tend toward the new long run equilibrium where
2. Consider a perfectly competitive market for anchovies. The demand curve is given by QD = 72 – 2PD and the supply curve is given by Qs = 3Ps – 3. a) Find the equilibrium price and quantity traded in this market. What does 'equilibrium' mean here? How would a price floor of $10 per unit have changed the quantity traded and why? b) Sketch the supply and demand curves (on the usual axes) and mark the equilibrium point. Calculate the amount of consumer and producer surplus in equilibrium (please remember to include the appropriate units of measurement for your answer).
Consider the competitive market for copper. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. (?) 80 72 04 55 ATC y 40 D 32 10 AVC 8 MC 0 0 6 18 21 24 30 QUANTITY (Thousands of pounds) The following diagram shows the market demand for copper. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 40 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 60 firms. (?) 80 72 Supply (20 firms) 64 Demand 58 33 Supply (40 firms) 40…
10. In a competitive market, the current equilibrium price is $200 per unit. A firm that produces Q units of output in this market has a short-run Total Cost (TC) given by TC = 8000 + 40Q + Q². What is the marginal cost for this firm? How many units should the firm produce?
3. In a competitive market where all firms have cost function C(q) (a) what is the long-run equilibrium quantity produced by each firm? (b) what is the long-run equilibrium market price? (Hint: Use the condition price = MC = AC, or find the output that minimises AC).) = 8q² + 128:
5. Suppose the market is perfectly competitive. The market equilibrium market price P = $20. A consumer's willingness to pay (WTP) is 30 - q. how much will this consumer buy and why? A firm's MC= 2q. What is the profit maximizing quantity this firm will produce? can you tell if this firm is making positive, negative, or zero economic profit?
Suppose the competitive tablet market is in long-run equilibrium. If at this equilibrium, the typical firm produces 20,000 tablets per month, total costs for this production are $1,800,000, and the minimum of the average variable costs is $70, what price will Instructions: Enter your responses as a whole number. a. induce entry into the market? When the price rises above $ b. cause firms to shut down production in the short run?
2. The market for a slice of pizza in Oakland is highly competitive. The market demand for a slice of pizza can be summarized by the function: D(p) = 1200 — 200p. Consider each pizza shop to be an individual firm with the 1 same cost function C(q) = FC + - q2, where FC represents fixed cost of renting a space from which to sell pizza, and the variable costs reflect the cost of the labor involved in producing and selling pizza. a. In the short-run (e.g. the six months following the signing of a lease for a space from which to sell pizza) determine the quantity each pizza shop would produce for any price in the market. b. In what way does your answer to part (a) depend on the fixed cost? Explain your answer in no more than two sentences. c. Suppose initially there are 100 pizza shops selling pizza in Oakland. Derive an expression for the short-run market supply for pizza. d. Find the short-run equilibrium price and quantity in the Oakland pizza market. How does this equilibrium depend on…
Consider the competitive market for ruthenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. 80 72 56 · ཉི་ ཀ་ཇཱ་སྐ་ན་ COSTS (Dollars per pound) AVC 16 MC- 8 ATC B 12 16 20 24 28 QUANTITY (Thousands of pounds) 36 The following graph plots the market demand curve for ruthenium. ? Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms. PRICE (Dollars per pound) 80 72…
Suppose that the market for black sweaters is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. 50 45 Profit or Loss 40 35 ATC 20 15 AVC 10 MC 4 10 12 14 16 18 20 QUANTITY (Thousands of sweaters per day) In the short run, at a market price of $15 per sweater, this firm will choose to produce Sweaters per day. On the preceding graph, use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss if the market price is $15 and the firm chooses to produce the quantity you already selected. Note: In the following question, enter a positive number, even if it represents a loss. The area of this rectangle indicates that the firm's v would be$ thousand per day in the short run. PRICE(Dollars per sweater)