Each firm in a competitive market has a cost function of so its marginal cost function is The market demand function is Determine the long-run equilibrium price, quantity per firm, market quantity, and number of firms.
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Each firm in a competitive market has a cost function of 
so its marginal cost function is 
The market demand function is 
Determine the long-run equilibrium price, quantity per firm, market quantity, and number of firms.
Concept
In long-run equilibrium, economic profit is zero. Whenever the price of a company's production equals the average cost of goods, it's called zero economic profit.
Long run equilibrium condition is P = AC
Step by step
Solved in 3 steps
- Each firm in a competitive market has a cost function of: so its marginal cost function is The market demand function is C=36+q², MC=2q. Q=36-p. Determine the long-run equilibrium price, quantity per firm, market quantity, and number of firms. The output per firm is. (round your answer to the nearest integer)Each firm in a competitive market has a cost function of: C= 49 + q?. so its marginal cost function is MC = 2q. The market demand function is Q = 56 -p. Determine the long-run equilibrium price, quantity per firm, market quantity, and number of firms. The output per firm is. (round your answer to the nearest integer) The long-run equilibrium number of firms is (round your answer to the nearest integer) The long-run equilibrium price is $. (round your answer to the nearest penny)A firm's demand function is Q = 16 – P and its total cost function is defined as TC = 3 + Q +0.25Q 2 . Use these two functions to form the firm's profit function and then determine the level ofoutput that yields the profit maximum. What is the level of profit at the optimum?
- With identical firms, constant input prices, and all the other characteristics of a competitive market A)a shift in demand has no effect on the long-run average cost, resulting in a change in equilibrium quantity but not price. B)a shift in demand has no effect on the long-run average cost and so there is no change in equilibrium price and quantity. C)a shift in demand will change the equilibrium price and quantity. D)a shift in demand has no effect on the long-run average cost, resulting in a change in equilibrium price but not quantity.The inverse demand for tea is given by P = 8 – 0.03Q, where Pis the price per a gram of tea and Q is the total number of grams of tea brought to market. There are two tea shops in the market. Shop 1's cost function is given by C = 0.02q,?, where q, is the number of grams of tea it brings to market. Shop 2's cost function is given by C2 = 0.02q22, where q2 is the number of grams of tea it brings to %3D %3D market. Given that the two shops compete by setting output (Cournot), answer the following. a) Identify shop 1's reaction function to shop 2's output to within 2 decimal places (e.g. 0.33). 91= Number Number 92 b) Identify shop 2's reaction function to shop 1's output to within 2 decimal places (e.g. 0.71). q2= Number Number 91 c) To within two decimal places (e.g. 0.63) what is the equilibrium output level of each shop and the equilibrium per gram price for tea. Shop 1 will produce Number grams of tea and shop 2 will produce Number grams of tea. The equilibrium market price is £…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 inverse demand for tea is given by P= 10 – 0.04Q, where Pis the price per a gram of tea and Qis the total number of grams of tea brought to market. There are two tea shops in the market. Shop 1's cost function is given by C = 0.01q,?, where qı is the number of grams of tea it brings to market. Shop 2's cost function is given by C2 = 0.01q2², where qp is the number of grams of tea it brings to market. Given that the two shops compete by setting output (Cournot), answer the following. a) Identify shop 1's reaction function to shop 2's output to within 2 decimal places (e.g. 0.33). 91= Number - Number 92 b) Identify shop 2's reaction function to shop 1's output to within 2 decimal places (e.g. 0.71). q2= Number Number 91 c) To within two decimal places (e.g. 0.63) what is the equilibrium output level of each shop and the equilibrium per gram price for tea. Shop 1 will produce Number grams of tea and shop 2 will produce Number grams of tea. The equilibrium market price is £ NumberThe market for paperback detective novels is perfectly competitive. Market Demand is given by Q=450-6P. Market Supply is given by Q=4P-13. Suppose 21 units are bought to the market. Consider the Marginal Cost of production for these 21 units. What is the maximum Marginal Cost of production of these 21 units? Enter a number only, do not include the $ sign. Hint: 21 doesn't have to be the market quantity.A firm has a linear demand function for it's product.When the price of the product is sh.20,the quantity demanded is 40 units.When the price increases to sh.240 the quantity demanded becomes 30 units.In addition,the firm's marginal cost function is giving by: Mc = 40q- 2q^2+2 Fixed cost = 5 million Where q= quantity demanded,Mc = marginal cost(sh.million) Required 1.The level of output that maximises profits 2.The maximum profit 3.The price of the product at the maximum profit
- Consider the following graph of the average and marginal cost functions for a firm in a perfectly competitive market. At a price of P=10: (iii) the marginal cost of production is . (iv) the firm's total profit is . (v) the firm's variable profit is .Firm A and Firm B sell identical goods The total market demand is:Q(P) = 1,000-1.0P The inverse demand function is therefore: P(QM) = 10,000-10QM QM is total market production (i.e., combined production of firm’s A and B). That is: QM = QA + QB As a result, the inverse demand curve for each firm is: P(QA,QB) = 10,000-10QA-10QB The difference between this example and the example in class is that the two firms have different costs. Firm A has the same cost as in class, but firm B has a different cost function: TCA(QA) = 5000QA TCB(QB) = 5000QB Using the demand function and the cost functions above, what is firm A’s profit function? Using the profit function above and assuming that firm B produces QB, calculate what firm A’s best response is to firm B’s decision to produce QB. (Note: Firm A’s best response should be a function of QB) Using the demand function and the cost functions above, what is firm B’s profit function? Using the profit function above and assuming that firm A…Kenan's stationary shop operates in a perfectly competitive market where the price for a pen (his only product) is $3. If the marginal cost function is MC=0.1q: (i) The profit-maximizing level of output is _____ (ii) The variable profit is _____ (iii) The producer surplus is _____ If Kenan also has a fixed cost of $50, then: (iv) The total profit is _____ If Kenan cannot avoid the fixed cost, Kenan should _____ Answer options (please only select from the following): -5, 0, 3, 5, 10, 30, 45, 50, continue to produce, shut down, other
