Determine the range of prices for which the firm incurs a, Ask an Expert

Economics

(i) A competitive firm's short run total cost function is given by TC = Q(to the 2nd power) + 40Q + 81

(a) Determine the range of prices for which the firm incurs a loss but continues to produce. Also determine the range of prices for which the firm earns a profit.

(b) find out the profit maximizing output and the resulting profit when price is $100.

(iii) Suppose that Saudi Arabia lets other members of OPEC sell all the oil they want at the existing price which the Saudis set and other members accept. The daily world demand for OPEC oil is given by: P = 88 - 2Q

where P is the price per barrel of oil and Q the total quantity of OPEC oil (in millions of barrels per day). The supply function for other members of OPEC who behave like a "competitive fringe" is given by: Qr = .6P

The Saudis' cost of production of oil is given by:
TCs = 15Qs +20 where Qs is the daily output of oil produced by the Saudis.

find out the price that Saudi Arabia will set to maximize its own profit.

Also find out the optimal output and profit of the Saudis. Determine the output produced by other members of the OPEC as well as the total market output.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M975619

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