Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

problem: Cost

a) Complete the given table:

958_cost table.jpg

b) Draw one graph of ATC, AVC and MC. Draw other graph with TC.

c) What happens to ATC as Q increases?

d) Where does MC cross AVC? ATC?

e) Assume that fixed costs increase by $20.  How will this influence TFC, TVC, TC, ATC, AVC and MC? Which numbers change and which stay similar?

f) Assume that raw material prices increase by 20%.  How will this influence TFC, TVC, TC, ATC, AVC and MC?

problem: Perfect Competition

a) What does it signify for a market to be perfectly competitive? What are the three conditions of perfect competition?  What does it signify for firms to be ‘price takers’?

b) Let’s focus on just the per unit information from the table in problem #1. Complete the table.

1890_perfect competition table.jpg

c) Assume that the market price of this product is $57. How much would a profit maximizing firm choose to produce?  Compute profits or losses.

Please note there are two ways to find the right answer to these problems. The tough way is to compute total revenue, total cost and profit for each possible quantity and then pick the Q that yields the maximum profit.

The simple way is to use marginal analysis. As I’m going to ask you to do this several more times with different prices, I propose you figure out the simple way.

468_profit or loss.jpg

d) How high does the price require being for firms to be able to make a profit? This is the long run shutdown price – if a firm can’t make a profit it will shutdown at certain point.

e) How low can the price go before a firm will shut down instantly?

f) Now let’s scale up from 1 firm to many firms. Assume that there are 500 identical firms competing in this industry.  Complete the table (it is really a supply schedule).

255_quantity supplied.jpg

g) Graph the industry supply curve with Q on the horizontal and P on the vertical.

h) Take the given data on demand and add up it to your graph. Find the equilibrium price in this market.

83_equillibrium market.jpg

i) How are firms doing at the equilibrium price? Are they earning profits or losing money? Do you expect the number of firms to mount or drop in this industry?

problem: Monopoly.

Use all the information on costs from problem #1, but now our firm has gained a monopoly and is the only seller for this product. Use the information in this table on demand, altogether with info on costs to answer the problems.

a) Complete the table.

2278_monopoly table.jpg

b) Graph Demand, MC, and MR.

c) How much will a profit maximizing monopolist choose to produce? What price will they charge? Compute firm profits at this level of output.

d) What would happen if the monopolist produced one more unit? What would the cost of producing the next unit be?  How much could the monopolist sell the next unit for? Why won’t the monopolist generate this next unit?

e) Is the monopoly outcome proficient? Are there some units that pass a cost benefit test which aren’t being produced?  Show the dead-weight loss on your graph.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9204

Have any Question? 


Related Questions in Microeconomics

Question discuss in scholarly detail organizational

Question: Discuss in scholarly detail organizational leadership in the context of a leader's action and why is it important for a leader to clarify strategic intent in his or her actions? How does a leader do this? The r ...

Question suppose the current equilibrium price of a

Question: Suppose the current equilibrium price of a quarter-pound hamburger is $5, and 10 million quarter-pound hamburgers are sold per month. After the federal government imposes a tax of $0.50 per hamburger, the equil ...

Question - after reading business cycles by christina d

Question - After reading Business Cycles By Christina D. Romer, answer this: What were the causes of business cycles before 1914? What happened to Business Cycles between 1929 and 1948? What was the history of Business C ...

Question the following article appeared on the front page

Question: The following article appeared on the front page of the Wall Street Journal on April 17, 1998: The public, by 79% to 17%, favors raising the minimum hourly wage by $1 to $6.15. But Princeton economist Alan Krue ...

Question firms engage in an activity called forward pricing

Question: Firms engage in an activity called "forward pricing" when they establish, during the early stages of the learning curve, a price for their product that is lower than their actual costs, in anticipation of lower ...

Question jana enjoys traveling with her family as a result

Question: Jana enjoys traveling with her family. As a result, she has a strong preference for a job that provides a substantial number of paid vacation days. Her current job gives her 15 days of paid vacation and her ann ...

Question suppose the government decided to levy the current

Question: Suppose the government decided to levy the current 15.3% social security tax on all levels of wages and salaries, not just the first $80,000, and used all the money collected to pay for prescription drug benefi ...

Question in allocating resources for the next calendar year

Question: In allocating resources for the next calendar year, the company budgeted for hiring one additional part-time staff member at $12,480 to focus on advertising. The company also budgeted for $55,000 in advertising ...

Question joyce loves to work and loves earning money john

Question: Joyce loves to work and loves earning money. John loves relaxing and doesn't care about money. Assume that John and Joyce have the same wage of $10 per hour. (2pts) a. Graphically show a wage rate at which Joyc ...

Question in the tradeoff between economic output and

Question: In the tradeoff between economic output and environmental protection, what do the combinations on the protection possibility curve represent? The response must be typed, single spaced, must be in times new roma ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As