Suppose TC= 10+0.1q², MC = 0.2q. If p = 10, the firm's profit on the perfectl competitive market in the short run will be (a) 240 (b) 250 (c) 260 (d) -10 because the firm will shut down. (e) None of the above
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- Suppose you are a perfectly competitive firm producing computer memory chips. Your production capacity is 1000 units pe r year. Your marginal cost is P10 per chip up to capacity. You have a fixed cost of P10,000 if production is positive and P0 if you shut down. What are your profit-maximizing levels of production and profit if the market price is (A) P5 per chip, (B), P15 per chip, and (C) P25 per chip? For case (B), explain why production is positive even though profits are negative.Your minimum AVC will determine if you should continue to produce or shut down. 17. If market price is below minimum AVC firms should 18. If market price is greater than or equal to minimum AVC firms shouldTRUE OR false.. The firm should shut down its operations if the total revenue cannot cover the total variable cost
- Suppose that, in a perfectly competitive industry, every firm has total cost function TC(Q)= 5million +4Q+Q²/50,000. Demand is given by D(p) - 375,000(42-2p). (a) If the industry consists of five firms, with no possibility of entry or exit, how much does each firm produce in equilibrium? (b) What is the profit of each firm? (c) How would you answer to part (a) change if there would be a possibility of entry and/or exit? Provide a sketch of how one would solve for the equilibrium outcome.. Suppose TC= 10+0.1q², MC = 0.2q. If p = 10, the firm's profit on the perfectly competitive market in the short run will be (a) 240 (b) 250 (c) 260 (d) -10 because the firm will shut down. (e) None of the above 4. Dayna's Doorstops, Inc. (DD) is a monopolist in the doorstop industry. Its cost is TC 100-5q+q², MC = 2q-5, and the demand function is Q = 55-p (inverse demand is p = 55 - Q). What price should DD set to maximize profit? (a) 20 (b) 25 (c) 30 (d) 35 (e) 40 9:45 PMEach firm in a perfectly competetive market has a long-run total cost of LRTC = 100g – 10q + 100. The market demand is Q* = 2150 – 5P. At the long-run equilibrium price, how many firms will there be in the market? (а) 500 (b) 1,000 (c) 1,200 (d) 2,000 (e) 2,400
- 6.10. Firm supply and industry supply. A firm's marginal cost curve is given by MC(q) = 1+1 q. The minimum of the firm's aver- age cost is given by 2.5. (a) Plot the firm's marginal cost function. (b) Derive the expression of the firm's supply curve. (c) Determine the firm's optimal output level when p 4. (d) Determine the firm's optimal output level when p = 2. (e) Suppose that the industry in question comprises 200 firms like the one above. Derive the industry supply curve.1. Consider the perfectly competitive market for guitar tuners. The mar- ket price for a guitar tuner is $20 and the cost functions are: TC (q) = .01q² + .2q + 4950 %3D MC (q) = .02g +.2 (a) Find the profit-maximizing quantity of guitar tuners produced by a firm in this market. (b) Calculate the profit each firm will earn in this market (c) Graphically depict the firm's profit-maximization problem. (note: this doesn't need to be to scale but should accurately reflect the sign of the profit) (d) Will firms enter into this market in the long run? (e) Graphically show how the price will change as the market pro- gresses towards a long-run equilibrium. (There's no need to find the exact long-run equilibrium price. Just follow similar steps to what we did in class)Lukanga Water has been providing water services in the Central Province for more than 20 years. Business analysts estimated the demand for water is P 40- 5Q, where Q is the number of clients served (in thousands) and P is the price charged (in millions of Kwacha). Lukanga Water total costs are determined as TC = 10 - 0.75Q. (a) How much is the profit maximizing level of output? (b) How much is Price at profit maximizing level of output? (c) Calculate the Profit level.
- Given the cost data in the table below, the firm will shut down and produce zero output if the market price falls below in which case the firm's loss is Average Total Variable Total Cost, Marginal Cost, Average Total Output, Q Variable Cost, Cost, TVCIQ) TC(Q) MC(Q) Cost, ATC(Q) AVCIQ) 80 $9.813.33 $11,813.33 $48.00 $122.67 $147.67 90 $10,260.00 $12,260.00 $42.00 $114.00 $136.22 100 $10,666.67 $12,666.67 $40.00 $106.67 $126.67 110 $11,073.33 $13,073.33 $42.00 $100.67 $118.85 120 $11,520.00 $13,520.00 $48.00 $96.00 $112.67 130 $12,046.67 $14,046.67 $58.00 $92.67 $108.05 140 $12,693.33 $14,693.33 $72.00 $90.67 $104.95 150 $13,500.00 $15,500.00 $90.00 $90.00 $103.33 160 $14,506.67 $16.506.67 $112.00 $90.67 $103.17 170 $15,753.33 $17,753.33 $138.00 $92.67 $104.43 180 $17,280.00 $19,280.00 $168.00 $96.00 $107.11 190 $19,126.67 $21,126.67 $202.00 $100.67 $111.19 200 $21,333.33 $23,333.33 $240.00 $106.67 $116.67 O $40; $12,666.67. O $90; $2,000. O $103.17: $2.000. $90; $0. O $90; $29,000. O…A manufacturer of electric switches in a competitive industry has a fixedmonthly cost of $50,000, total monthly variable cost $100,000, and marginalcost of $5. What is the profit if the monthly production is 100,000 units?Assuming that prices of switches fluctuate from month to month, what is the lowest price the manufacturer can accept in order to stay in business in the long run and in the short run. Will those prices be the same? Show detail work4. A vertically integrated automobile company has an upstream engine division and a downstream assembly division. The demand for the company's cars is given by Q = 20-P. Each car requires one engine. The downstream division's total cost of assembling cars is TCD(Q) = 4Q. The upstream division's total cost of producing engines is TCv (Q) = Q². (a) Suppose that there is no outside market for engines. What is the price and quantity of cars produced by the company? (b) Suppose that there is no outside market for engines. What should be the transfer price for engines? [Hint: the transfer price of an engine should equal the marginal cost of engine production at the optimal quantity.] (c) Suppose that there is a competitive outside market in which the price of an engine is 12. What is the price and quantity of cars produced by the company? (d) Suppose that there is a competitive outside market in which the price of an engine is 12. What is the quantity of engines that the company buys or…