A firm can produce any quantity of good X with the following cost structure: TC = 450,000 + 20Q, where Q measures units of output. a. What happens to the firm's average total cost of production as it expands output? b. What type of firm is this an example of? c. The industry demand for good X is Q = 100,000 - 500P. At the profitmaximizing output level, calculate the firm's ATC of production. d. Suppose the profit-maximizing output level you calculated to answer part c Is split evenly between two firms, each with the cost structure given by TC = 450,000 + 20Q. What is the ATC of production in this two-firm industry?

1.   A firm can produce any quantity of good X with the following cost structure: TC = 450,000 + 20Q, where Q measures units of output.

a.   What happens to the firm's average total cost of production as it expands output?

b. What type of firm is this an example of?

c. The industry demand for good X is Q = 100,000 – 500P. At the profit- maximizing output level, calculate the firm's ATC of production.

d. Suppose the profit-maximizing output level you calculated to answer part c Is split evenly between two firms, each with the cost structure given by TC = 450,000 + 20Q. What is the ATC of production in this two-firm industry?  

2.  Suppose that market demand is Q = 660 – 12P and marginal cost is MC = 5.

a. Calculate consumer and producer surplus assuming a perfectly competitive market.

b. Calculate consumer and producer surplus assuming a monopoly market. 

3.  A firm with market power faces the demand curve Q = 400 – P/4 and a marginal cost of MC = 2Q. Calculate the area of the deadweight loss triangle. 

4. Firm A has price elasticity of demand of –1.5 and a marginal cost of $30. Firm B has a price elasticity of demand of –2.0 and a marginal cost of $30. What is the profit-maximizing price of each firm? 

5.Suppose a firm faces the demand curve ?? = 100/??! which gives a constant price elasticity of demand of –2. (To answer the next two questions, it will be helpful to recall the Lerner index.)

a. If the firm's marginal cost is constant at $2, what is the profit-maximizing price and quantity?

b. If the firm's marginal cost increases to a constant $3, what is the profit

-maximizing price and quantity?