Suppose that a competitive firm's marginal cost of producing output q (MC) is given byAssume that the market price (P) of the firm's product is $15.What level of output (q) will the firm produce?The firm will produce units of output. (Enter your response rounded to two decimal places.)What is the firm's producer surplus?Producer surplus (PS) is $ (Enter your response rounded to two decimal places.)Suppose that the average variable cost of the firm (AVC) is given byMC(q)=3+2q.AVC(q)=3+1q.Suppose that the firm's fixed costs (FC) are known to be $50. Will the firm be eaming a positive, negative, or zero profit in the short run?In the short run, the firm's profit will be positiveEnter your answer in each of the answer boxes.

Competitive Firm and Profit Maximization:In a perfectly competitive market, firms are price-takers,…

Answered: Suppose that a competitive firm's…

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter25: Monopoly

Section: Chapter Questions

Problem 9E

See similar textbooks

Similar questions

PQ4.2 Case: A firm is operating in a competitive market. Your Cost of Production is given by C = 200 + 2q², where the Level of Output is (q) and the Total Cost is (C). The Marginal Cost of Production (MC) is 4q; the Fixed Cost (FC) is $200. Given: C=200+2q² q=Level of Output C = Total Cost MC = 4q| FC = $200 Questions: (i) If the price of watches is $100, how many watches should you produce to Maximize Profit? (ii) What will the Profit Level be? (iii) At what Minimum Price will the firm produce a Positive Output?
A firm in a competitive market has the following cost structure. Quantity Average Total Cost (Units) (Dollars) 0 1 2 3 4 5 Refer to Table 14-8. If the firm's fixed cost of production is $3, and the market price is $10, how many units should the firm produce to maximize profit? 1 unit 3 units 2 units 10 8 7 8 10 4 units
A competitive firm has a total cost function: TC = 20 + 50q − 6q2 + q3 and a marginal cost function MC = 50 − 12q + 3q2. (a) If the market price is P = $230 per unit, the firm will supply 10 units of the good. Calculate: (i) the profit (ii) the producer's surplus (b) Assume that the market price is P = $50 per unit. Find (i) the level of output supplied by the firm (ii) the firm's profit (use a minus before your answer if the firm incurred a loss) (c) Calculate the range of prices for which the firm will find it optimal to shut down.
The market for paperback detective novels is perfectly competitive. Market Demand is given by Q=393-7P. Market Supply is given by Q=3P-9. Suppose 55 units are bought to the market. Consider the Marginal Cost of production for these 55 units. What is the maximum Marginal Cost of production of these 55 units? Enter a number only, do not include the $ sign. Hint: 55 doesn't have to be the market quantity.
Suppose you are the manager of a watchmaking firm operating in a competitive market. Your cost of production is given by C= 300 + 29°, where q is the level of output and C is total cost. (The marginal cost of production, MC(q), is 4q; the fixed cost, FC, is $300). If the price of a watch is $80, how many watches should you produce to maximize profits? You should produce watches. (Enter your response as an integer.) What will the profit level be? Profit will be $ (Enter your response rounded to two decimal places.) At what minimum price will the firm produce a positive output? In the short run, the firm will produce if price is greater than $ per watch. (Enter your response as an integer.)
The market demand for Gucci bags is given by the function P = 75 - 1.5Q. P is price per bag, and Q is output per time period. The market supply is given as P = 25 + 0.50Q. A typical competitive firm that markets this type of bag has a marginal cost of production of MC = 2.5 + 10q. a) Calculate the market equilibrium price for the bags as well as the output rate in the market. b) Calculate how much the typical firm will produce per time period at the equilibrium price. c) If all firms had the same cost structure, how many firms would compete at the equilibrium price computed in (a) above?
Assume a competitive firm faces a market price of $100, a cost curve of: C = 0.25q + 50q + 1,600 and a marginal cost curve of: MC = 0.50g + 50. The firm's profit maximizing output level is 100.00 units, the profit per unit is $9.00, and total profit is: $900.00. However, if the firm wanted to maximize the profit per unit, how much would it produce? It would produce units. (round your answer to two decimal places) If the firm produced this output level, what would be the profit? Its profit would be S. (round your answer to the nearest penny)
a) Find the long run equilibrium price. Find the minimum efficient scale of the typical firm. Find the typical firm’s average cost when it operates at minimum efficient scale. In the long run, what price will prevail in this market? In words, clearly justify your answer. Suppose demand is QD = 3,200 – 100P. (b) Explain why you expect the number of firms in this market to be fifty-five. In this market, what is the short run supply function of the typical firm? What is the short run market supply function? Suppose the local government introduced a $90 licensing fee that raised the fixed cost from $160 to $250. c) Would the introduction of the licensing fee affect the short run equilibrium price or quantity? Justify your answer? Clearly explain why you expect that in the long run fewer larger firms will operate in this market. After the introduction of the licensing fee, what is the new long run equilibrium price? How many firms will survive in this market?
Suppose that the firm operates in a perfectly competitive market. The market price of his product is$10. The firm estimates its cost of production with the following cost function: TC=10q-4q2+q3 A. What level of out put should the firm produce to maximize its profit? B. Determine the level of profit at equilibrium. C. What minimum price is required by the firm to stay in the market?
A flour mill buys its wheat from two different farms, then processes the wheat into flour. Wheat from Farm X costs the mill $7 per bushel, and wheat from Farm Y costs the mill $15 per bushel. The selling price (in dollars per bushel) for the mill's wheat can be modeled by p(x, y) = 500 x y where x is the demand for the flour milled from Farm X's wheat and y is the demand for flour milled from Farm Y's wheat. Assume that x and y may be zero (so the mill only buys from one of the suppliers) and that the mill can by 1/2 of a bushel. Then the maximum profit is attained when x = y = bushels bushels The amount of the flour mill's maximum profit is $
You are given the following information for a producer of organic grommets in a perfectly competitive market. TFC = $8 Market price = $13 Quantity MC ($) 1 10 2 8 3 9 4 11 5 14 6 18 The marginal cost of production appears in the table above. What is the profit-maximizing output? Is the firm making a profit or loss? How much?
Suppose that the firm operates in a perfectly competitive market. The market price of his product is $4. The firm estimates its cost of production with the following cost function: TC=50+20q-5q2+0.33q3 a. What level of output should the firm produce to maximize its profit? b. Determine the level of profit at equilibrium. c. What minimum price is required by the firm to stay in the market?

SEE MORE QUESTIONS

Recommended textbooks for you

Economics:

Economics

ISBN:

9781285859460

Author:

BOYES, William

Publisher:

Cengage Learning

Economics:

Economics

ISBN:

9781285859460

Author:

BOYES, William

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS