Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 11E
To determine
Identify the maximizing profit, level of output, and
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The market for paperback detective novels is perfectly competitive. Market Demand is given by Q=393-7P. Market Supply is given by Q=3P-9.
Suppose 55 units are bought to the market. Consider the Marginal Cost of production for these 55 units. What is the maximum Marginal Cost of production of these 55 units? Enter a number only, do not include the $ sign.
Hint: 55 doesn't have to be the market quantity.
A competitive firm has a total cost function: TC = 20 + 50q β 6q2Β + q3Β and a marginal cost function MC = 50 β 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.
A firm faces the market demand curve: P=90-Q/4 where P = price and Q = output
The firm has the total cost function: TC =1/4Q^2 -6Q+40
(a) Write out the firm's profit function in terms of output (Hint: rewrite the demand curve with price
as a function of output).
Chapter 8 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
Ch. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 6RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQ
Ch. 8 - Prob. 11RQCh. 8 - Prob. 12RQCh. 8 - Prob. 13RQCh. 8 - Prob. 14RQCh. 8 - Prob. 1ECh. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Suppose you are the manager of a watchmaking firm...Ch. 8 - Prob. 5ECh. 8 - Prob. 6ECh. 8 - Prob. 7ECh. 8 - Prob. 8ECh. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 - A sales tax of 1 per unit of output is placed on a...Ch. 8 - Prob. 15E
Knowledge Booster
Similar questions
- There are currently 200 perfectly competitive firms producing output q. Β The cost function of each firm is C(q)=196+4q2 . Β The demand in this market is QD = 3,920-10P. Β Compute the equilibrium price and market quantity. Compute the profit of each firm. Compute the producer surplus in this market. Β Please show all work. (Mainly confused about how to find profit) Β Answers: p=112, Q=2,800, profit=588, PS=156,800arrow_forwardKenan'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, otherarrow_forwardSuppose that the firm operates in a perfectly competitive market. The market price of his product is$10. The firm estimates its cost of production with the following cost function: TC=10q-4q2+q3 A. What level of out put should the firm produce to maximize its profit? B. Determine the level of profit at equilibrium. C. What minimum price is required by the firm to stay in the market?arrow_forward
- The inverse demand for tea is given by P = 8 β 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 Β£β¦arrow_forwardThe inverse demand for tea is given by P= 10 β 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 qΔ± is the number of grams of tea it brings to market. Shop 2's cost function is given by C2 = 0.01q2Β², 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 Β£ Numberarrow_forwardSuppose that the firm operates in a perfectly competitive market. The market price of his product is $4. The firm estimates its cost of production with the following cost function: TC=50+20q-5q2+0.33q3 a. What level of output should the firm produce to maximize its profit? b. Determine the level of profit at equilibrium. c. What minimum price is required by the firm to stay in the market?arrow_forward
- A firm in a competitive market has the following cost structure. Quantity Average Total Cost (Units) (Dollars) 0 1 2 3 4 5 Refer to Table 14-8. If the firm's fixed cost of production is $3, and the market price is $10, how many units should the firm produce to maximize profit? 1 unit 3 units 2 units 10 8 7 8 10 4 unitsarrow_forwardGlowglobes are produced by identical firms in a perfectly competitive market. Each firm's Total Cost function is TC=599+17q+q^2 and Marginal Cost function is MC=17+2q. Market demand is Q=517-P.Β If the market price is $95, what is the quantity each firm produces?arrow_forwardA perfectly competitive firm has the total cost curve is given by: TC = 270+13q+0.4q2 . If the market price is $65. What is the firm supply curve (supply equation) Select one: (a) p=13+ 0.8q : p<13 (b) p=13+ 0.4q : p>13 (c) p=13+0.8q : p>13 (d) p= 270 + 13q : P>13arrow_forward
- 1) In a market there are 100 identical firms, where each firm has the supply function qs(P) = p/10. Draw a single firm's supply curve, draw and calculate the aggregate supply. 2) The cost function for Acme Laundry is C(q) = 10+ 10q + qΒ², where q is tons of laundry cleaned. Assume that the market is perfectly competitive. a. What q should the firm choose to maximize its profit if the market price is p? How much does it produce if p=50? b. Assume that the government imposes a per unit tax of t =2. How much should the firm produce to maximize its after-tax profit if the market price is p? How much does it produce ifp=50? 3) An increase in the demand for video films also increases the salaries of actors and actresses. Is the long- run supply curve for films likely to be horizontal or upward sloping? Explain.arrow_forwardThere are currently 10 identical firms in a perfectly competitive market. Each firm has a short-run total cost curve STC(Q) = 20 + 4Q +0.5Q, where Q is output produced by each firm. Market demand is D(P): = 200 β 2P. (a) Find the individual firm's shoutdown price. (b) Derive the individual firm's short-run supply curve.arrow_forwardIf the demand function is P = 74 β QΓ₯ and the supply function is P = (Q, + 2)Β². Calculate the consumer's surplus and producer's surplus under the perfect competition.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
