A firm sells its product in a perfectly competitive market. Its total cost function is: TC = 900 - 20Q + Q2 where TC is total cost and Q is output level. a. Find the firm’s average total cost function. b. Find the firm’s average variable cost function. c. Find the firm’s marginal cost function.
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A firm sells its product in a
where TC is total cost and Q is output level.
a. Find the firm’s
b. Find the firm’s
c. Find the firm’s marginal cost function.
d. Given the price is $100, what is the profit-maximizing output level?
e. Given the price is $100, what is the profit level?
f. Over time, is there going to be entry or exit in this competitive market? Why?
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- Assume that a firm in a competitive market faces the following cost information. If the market price for this firm's product is $40, calculate the profit maximizing level of output for this firm using marginal analysis. It may help to create your own cost table and fill in columns for Marginal Cost and Average Total Cost based on the Total Cost information below. a.What is the level of profit for this firm at the profit maximizing output? b.To convince yourself that the quantity you found is indeed the profit maximizing quantity, try calculating what the profit would be at the next higher level of output. What did you find? c. What do you predict will happen in this market over the long run?A price-taking firm's variable cost function is vC = 20°, where Qis its output per week. It has a sunk fixed cost of $256 per week. Its marginal cost is MC = 6Q°. a. What is the firm's supply function when the $256 fixed cost is sunk? Instructions: Enter your answer as a whole number. Q= (P/6)0.5 for P $| b. What is the firm's supply function when the fixed cost is avoidable? Instructions: Enter your answer as a whole number. Q= (P/6)0.5 for P2 $A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost of $200. What is its profit? What is its marginal cost? What is its average variable cost?
- Assume that a firm in a competitive market faces the following cost information. If the market price for this firm's product is $40, calculate the profit maximizing level of output for this firm using marginal analysis. a.Approximately where do you think the price will end up in this market over the long run? b.Last, instead of assuming a given price, how would you go about finding the equilibrium price if you were given information on market demand?Suppose Robin's Clock Works produces in a perfectly competitive market. Suppose the average total cost of clocks is $95, the average variable cost of clocks is $90, and the price of clocks is $85. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm: A) can increase profit by increasing output.B) is earning a positive economic profit.C) should continue to produce since total revenue exceeds total variable cost.D) should shut down.A firm produces a product in a perfectly competitive industry and has a total cost function TC= 50+4q+2q². a. At the short-run market price of $20, the firm is producing 5 units of output. Is the firm maximizing its profit? Explain. b. What quantity of output will the firm produce in the long run, assuming there is no change in cost structure? What will be the long-run equilibrium price? c. Graphically depict the long-run equilibrium for an individual firm within this market.
- Consider a firm whose total cost function is 2q3 – 6q2 + 13q.a. If the price of a unit of output is $13, what is the profit-maximizing value of q?b. Find the average cost function of the firm? What is the firm’s minimum average cost?c. What is the equilibrium price of output? How much does each firm produce at equilibriumprice? What is the firm’s short-run and long-run average cost at this quantity? What is eachfirm’s profit at the equilibrium price and quantity?The following figure shows the marginal cost curve, average total cost curve, average variable cost curve, and marginal revenue curve for a firm for different levels of output. Price R W S 0 A F H B G MC K ATC AVC MR Quantity Assuming that price at OR is $10, the profit maximizing level of output for the firm is 1. OA where marginal cost just covers AVC 2. OB where average profit per unit is the greatest 3. OC where marginal cost equals the $10 price 4. OK where average cost equals marginal revenue and the firm earns a normal rate of returnThe graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves for a firm in a competitive market. These curves imply a short-run supply curve that has two distinct parts. One part, not shown, lies along the vertical axis (quantity-0); this represents a condition of production shutdown. Where is the other part? Use the straight-line tool to drawit. To refer to the graphing tutorial for this question type, please click here Price and cost 18 15 14 13 12 10 19/21 SUBMIT ANSWER 13 OF 21 QUESTIONS C OMPLETED 28 MacBook Pro 금□ F7 F8 F9 F1o F2 F3 F5
- 1. Emad is a lettuce supplier in a perfectly competitive lettuce market in Kuwait. If the demand for lettuce in Kuwait is given by: Qo = 40,000 – 10,000P, Where Q is the quantity of lettuce boxes and P is the price of a lettuce box. In the short-run, Emad's has the following total cost function for his production of lettuce: TCimad = 0.25Q +Q +3 Assume that Emad is one of 1000 sellers in the Kuwaiti lettuce market with identical costs. Answer the following questions: e. wnat is tne market suppiy tunction in the short-run? 1. What is the short-run equilibrium price and equilibrium quantity in this market? g. Draw a rough sketch of the market demand and supply functions, showing the optimal point and all intersections with the horizontal and vertical axes. h. What is the demand function for Emad's lettuce in the short-run?A price-taking firm's variable cost function is VC = 20³, where Q is its output per week. It has a sunk fixed cost of $108 per week. Its marginal cost is MC = 6Q². a. What is the firm's supply function when the $108 fixed cost is sunk? Instructions: Enter your answer as a whole number. Q = (P/6) 0.5 for Pz $| b. What is the firm's supply function when the fixed cost is avoidable? Instructions: Enter your answer as a whole number. Q = (P/6) 0.5 for Pz $ 216 ✪ 0Suppose that over the short run (say the next 5 years), demand for OPEC oil is given by P = 165 – 2.5q. Here q is measured in millions of barrels a day. OPEC marginal cost per barrel is $15. What is OPEC’s optimal level of production? What is the prevailing price of oil at that level? Many experts contend that maximizing short-run profit is counterproductive for OPEC in the long run because high price reduces buyers to conserve energy and spur competition and new exploration that increases the overall supply of oil. Suppose that the demand curve just described will remain unchanged only if oil prices stabilize at $65 per barrel or below. If oil price exceeds this threshold, long run demand (over a second five year-period) will be curtailed to P = 135 – 2.5q. OPEC seeks to maximize its total profit over the next decade. What is the optimum output and price policy? (assume all values are present values)