Problem VIII: A perfectly competitive firm faces the total cost function T C = 2Q + 2Q^2. The firm is part of an industry where the market demand is given by P = 816 -2Q and the market supply is given by P = 12 + Q/100 .
a) What is the optimal quantity that this firm will sell on this market? What will be the resulting profit? (Q=3.5, Profit=24.5)
b) Assuming identical firms, how many firms are active on this market (need to be active on this market to satisfy the market equilibrium condition, given their individual production levels)? (N=114.29)
c) What is the shutdown point for this firm?
Problem VIII: A perfectly competitive firm faces the total cost function T C = 2Q + 2Q^2. The firm is part of an industry where the market demand is given by P = 816 -2Q and the market supply is given by P = 12 + Q/100 .
a) What is the optimal quantity that this firm will sell on this market? What will be the resulting profit? (Q=3.5, Profit=24.5)
b) Assuming identical firms, how many firms are active on this market (need to be active on this market to satisfy the market equilibrium condition, given their individual production levels)? (N=114.29)
c) What is the shutdown point for this firm?
Related textbook solutions
Related questions
Suppose that each firm in a competitive industry has the following costs:
Total Cost: TC=50+1/2 q2
Marginal Cost: MC=q
where q Ā is an individual firm's quantity produced.
The market demand curve for this product is:Ā
Demand QD=140-2P
whereĀ Ā PĀ is the price and QĀ is the total quantity of the good.
Each firm's fixed cost is $__________
Ā
What is each firm's variable cost?
_______ 50+1/2q
_______1/2q
_______q
_______1/2q2
Which of the following represents the equation for each firm's average total cost?
Ā Ā _____ 50/q
_______ 50/q+1/2q
_______1/2q
_______50+1/2q
Complete the following table by computing the marginal cost and average total cost forĀ Ā Ā Ā from 5 to 15.
| 5 | Ā | Ā |
| 6 | Ā | Ā |
| 7 | Ā | Ā |
| 8 | Ā | Ā |
| 9 | Ā | Ā |
| 10 | Ā | Ā |
| 11 | Ā | Ā |
| 12 | Ā | Ā |
| 13 | Ā | Ā |
| 14 | Ā | Ā |
| 15 | Ā | Ā |
The average total cost is at its minimum when the quantity each firm produces (q) iquals ________
Which of the following represents the equation for each firm's supply curve in the short run?
_______1/2q2
______q
_____50-q
_____120-1/2q2
In the long run, the firm will remain in the market and produce if________
Currently, there are 8 firms in the market.
In the short run, in which the number of firms is fixed, the equilibrium price is__________Ā In the short run, in which the number of firms is fixed, the equilibrium price is
________units. Each firm produces ________Ā nits. (Hint: Total supply in the market equals the number of firms times the quantity supplied by each firm.)
In this equilibrium, each firm makes a profit of _______Ā . (Note: Enter a negative number if the firm is incurring a loss.)
Firms have an incentive to EXIT/ENTERĀ the market.
In the long run, with free entry and exit, the equilibrium price is _______and the total quantity produced in the market is__________units. There are ________
firms in the market, with each firm producing _________units.
