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28 Sep 2019
Assume that the cost data in the table below are for a purely competitive producer:
Total
Product
Average
Fixed Cost
Average Variable Cost
Average Total Cost
Marginal
Cost
0
1
$60.00
$45.00
$105.00
$45
2
30.00
42.50
72.50
40
3
20.00
40.00
60.00
35
4
15.00
37.50
52.50
30
5
12.00
37.00
49.00
35
6
10.00
37.50
47.50
40
7
8.57
38.57
47.14
45
8
7.50
40.63
48.13
55
9
6.67
43.33
50.00
65
10
6.00
46.50
52.50
75
- a. At a product price of $56, will this firm produce in the short run? It is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output?
- b. Answer question 2a assuming the product price is$41.
- c. Answer question 2a assuming the product price is$32.
- d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3).
(1)
Price
(2)
Quantity Supplied, Single Firm
(3)
Profit (+)
Or Loss (-)
(4)
Quantity Supplied
1500 Firms
$26
$
32
38
41
46
56
66
- e. Now assume that there are 1500 identical firms in this competitive industry; that is, there are 1500 firms, each of which has the cost data shown in the table. Complete the industry supply schedule (column 4).
- f. Suppose the market demand data for the product are as follows:
Price
Total Quantity Demanded
$26
17,000
32
15,000
38
13,500
41
12,000
46
10,500
56
9,500
66
8,000
What will be the equilibrium price? What will be the equilibrium output for the industry? For each firm? What will profit or loss be per unit? Per firm? Will this industry expand or contract in the long run?
Assume that the cost data in the table below are for a purely competitive producer:
Total Product |
Average Fixed Cost |
Average Variable Cost |
Average Total Cost |
Marginal Cost |
0 |
||||
1 |
$60.00 |
$45.00 |
$105.00 |
$45 |
2 |
30.00 |
42.50 |
72.50 |
40 |
3 |
20.00 |
40.00 |
60.00 |
35 |
4 |
15.00 |
37.50 |
52.50 |
30 |
5 |
12.00 |
37.00 |
49.00 |
35 |
6 |
10.00 |
37.50 |
47.50 |
40 |
7 |
8.57 |
38.57 |
47.14 |
45 |
8 |
7.50 |
40.63 |
48.13 |
55 |
9 |
6.67 |
43.33 |
50.00 |
65 |
10 |
6.00 |
46.50 |
52.50 |
75 |
- a. At a product price of $56, will this firm produce in the short run? It is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output?
- b. Answer question 2a assuming the product price is$41.
- c. Answer question 2a assuming the product price is$32.
- d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3).
(1) Price |
(2) Quantity Supplied, Single Firm |
(3) Profit (+) Or Loss (-) |
(4) Quantity Supplied 1500 Firms |
$26 |
$ |
||
32 |
|||
38 |
|||
41 |
|||
46 |
|||
56 |
|||
66 |
- e. Now assume that there are 1500 identical firms in this competitive industry; that is, there are 1500 firms, each of which has the cost data shown in the table. Complete the industry supply schedule (column 4).
- f. Suppose the market demand data for the product are as follows:
Price |
Total Quantity Demanded |
$26 |
17,000 |
32 |
15,000 |
38 |
13,500 |
41 |
12,000 |
46 |
10,500 |
56 |
9,500 |
66 |
8,000 |
What will be the equilibrium price? What will be the equilibrium output for the industry? For each firm? What will profit or loss be per unit? Per firm? Will this industry expand or contract in the long run?
Chika IlonahLv10
28 Sep 2019