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- 1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal costsof MC = 5 + 14q, and average variable costs of AVC = 5 + 7q.(a) What are the firm's variable costs (VC)?(b) What is the firm's total cost function? (0) If the price is $75, how much does the firm supply? (d) Does the firm continue to supply this quantity in the short-run? (e) Suppose there exists a standard market demand function from consumers(downward slopping). Please provide a logical discussion about how the marketachieves short-run equilibrium.2. Consider a market with 90 firms, each firm has a short-run total cost function as follows: TC(q) = 5q², and a marginal cost function: MC(q) = 10q. Market demand is given by equation Q“(p) = 200 - p. a. What is the fixed cost? Solve the average variable cost function in the short-run. b. What is the supply function of each firm? c. Solve for the short-run equilibrium outcome: P*, Q* and q*. d. What is one firm's economic profit in this market? e. Consider a different market structure, where there is only one firm, interpreted as a monopolist, and then critically discuss the impact on equilibrium price and quantity Discuss total surplus for these two types of market structures.2. Consider a market with 90 firms, each firm has a short-run total cost function as follows: TC(q) = 5q2, and a marginal cost function: MC(q) = 10q. Market demand is given by equation Qd(p) = 200 - p. a. What is the fixed cost? Solve the average variable cost function in the short-run. b. What is the supply function of each firm? c. Solve for the short-run equilibrium outcome: P*, Q* and q*. d. What is one firm's economic profit in this market? e. Consider a different market structure, where there is only one firm, interpreted as a monopolist, and then critically discuss the impact on equilibrium price and quantity. Discuss total surplus for these two types of market structures.
- Suppose solar panel manufacturing is an industry subject to significant economies of scale, and there are currently three solar panel manufacturers all with identical costs. If the demand for solar panels is 5 times the quantity produced at the bottom of the long-run average cost curve, which of the following is most likely to happen to the solar panel manufacturing industry in the long run? O The number of solar panel manufacturers will increase O The price of solar panels will increase O The fixed costs of manufacturing solar panels will increase The quantity supplied of solar panels will decrease1) Graphite is an input into the production of pencils. If the pencil market is perfectly competitive, then in the short-run an increase in the price of graphite will cause: (a) The supply curve for pencils to shift up: True or False? (b) An increase in the market price for pencils. True or False? (c) The demand curve for pencils to shift down. True or False? For each of (a), (b), and (c) above, indicate whether the statement is True or False? Explain each briefly. Provide a graph illustrating your answer1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal costs of MC = 5 + 14g, and average variable costs of AVC = 5 + 7q. (a) What are the firm's variable costs (VC)? (b) What is the firm's total cost function? (c) If the price is $75, how much does the firm supply? (d) Does the firm continue to supply this quantity in the short-run? (e) Suppose there exists a standard market demand function from consumers (downward slopping). Please provide a logical discussion about how the market achieves short-run equilibrium.
- 1. There are 300 identical firms in a perfectly competitive market, the price of the output is p, the short-run cost function of a typical firm in the market is as follows: C(q) = q³-2q²+2q+10 a. What is this firm's (short-run) marginal cost function? b. What is this firm's (short-run) average variable cost function? c. What is this firm's (short-run) supply function? d. If p = 17, what is this firm's maximum profit?A perfectly competitive firm can produce its current level of output at an average total cost of $10 and a marginal cost of $8. If the market price of the product is currently $8, what should the firm do? a. The answer depends upon the relationship between price and average variable cost. The firm should shut down if average variable cost is $8 or greater, but the firm should continue to produce the current level of output if average variable cost is less than $8. O b. The firm should definitely shut down since average total cost exceeds price. Oc. The firm should continue to produce, but they should decrease production in order to increase profit. O d. The firm should increase production in order to increase profit. 0= Icon Key mentMain.do?takeAssignmentSessionLocator=assignment-take,53ef7eec-ce82-423c-a5cf-a72630d672e7#2. Let a firm's short run total cost curve be given by c(y) = 10+10y–y²+0.25y³; therefore: MC = 10 – 2y + 0.75y². All fixed costs are sunk. (a) Find the firm's short run supply curve (you may write it in inverse form). Draw it on a graph. (b) How much will the firm produce if p = $10? At this point, is the firm covering all costs (including fixed costs)?
- 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.Explain the fact that the short-run supply curve for a price taking firm is that segment of its marginal cost (MC) curvethat lies above the average variable cost curve?only typed answer Assume a competitive firm faces a market price of $120, a cost curve of: C = 13q3 + 20q + 500, and a marginal cost of: MC = q2 +20. What is the firm's profit maximizing output level? ?? Units (round your answer to two decimal places) What is the firm's profit maximizing price? ??? (round to the nearest penny) What is the firm's profit? ??? (round to the nearest npenny) In the short-run, this firm should ?? produce or shut down??