Calculate optimal supply

Assignment Help Macroeconomics
Reference no: EM1369173

Competitive market prices are determined by the interplay of aggregate supply and demand;individual firms have no control over price. Market demand reflects an aggregation of the quantities that customers will buy at each price. Market supply reflects a summation of the quantities that individual firms are willing to supply at different prices. The intersection of industry demand and supply curves determines the equilibrium market price. To illustrate this process, consider the following market demand curve where price is expressed as a function of Output:

P=$40-$0.0001Qd (Market Demand)

Or equivalently, when output is expressed as a function of price
Qd=400,000-10000P

Assume market supply is provided by five competitors producing a standardized product (Q). Firm supply schedules are as follows:

Q1 = 18+2P (Firm 1)
Q2 = 12+6P (Firm 2)
Q3 = 40+12P (Firm 3)
Q4=20+12P (Firm 4)
Q5=10+8P (Firm 5)

a. Calculate optimal supply by each firm at the competitive market prices indicated in the following table. Then, assume there are actually 1,000 firs just like each one illustrated in the table. Use this information to complete the Partial Market Supply and Total Market Supply columns.

Price Quantity Supplied
By Firm (000)
1+2+3+4+5 =Partial Market Supply x 1,000 = Total Market Supply(000)
$1
2
3
4
5
6
7
8

b. Sum the individual firm supply curves to derive the market supply curve. Plot the market demand and market supply curve with price as a function of output to illustrate the equilibrium price and level of output. Verify that this is indeed the market equilibrium price/output combination algebraically

 

Reference no: EM1369173

Questions Cloud

What is an ideal size for a corporate board of directors : What is an ideal size for a corporate board of directors and what is the ideal size for a corporate board of directors? 7 members or 15 members?
Conduct observation used in business or organization : Conduct the observation to someone involved in procedure which is used in the business or organization. This person could be someone at university.
Calculate the mass of the liquid in the vat : An unmarked police car travelling a constant 85 km/h is passed by a speeder. Precisely 2 s after the speeder passes, police officer steps on the accelerator.
What is the value of this annual profit : Which process type will maximize the annual profit from producing the Maxistand and what is the value of this annual profit?
Calculate optimal supply : Competitive market prices are determined through interplay of aggregate supply and demand, individual firms have no control over price. Market demand reflects an aggregation of the quantities that customers will buy at every price.
Find the force exerted by the wood on the bullet : A bullet of mass 0.0025 kg moving at 581 m/s impacts a large fixed block of wood and travels 5.40 cm before coming to rest.
What is present value of contract : If Professor Mamuns contract pays $100,000 every year for next 6 years, what is future value of this contract at 5% discount rate. What is present value of contract.
Example on informational privacy : Should Patricia Dunn have been forced to resign - Need is a social security number and a valid zip code and you can pose as the person and hack your way in. This my friends is called pretexting.
Determine the equilibrium price and quantity : Suppose that a small town uses a referendum to overcome free ridership problem & determine how its residents might value a new water filtration system for its public water supply.

Reviews

Write a Review

 

Macroeconomics Questions & Answers

  Heer enterprises requires someone to supply

Heer Enterprises requires someone to supply it with 198,000 cartons of machine screws per year to support its manufacturing needs over the next 6 years.

  Computing deadweight loss of monopoly

What price should DD set to maximize profits? What would output be if DD acted like a perfect competitor and set P = MC?

  Illustrate what can you determine about consumer demand

Illustrate what can you determine about consumer demand for your product from this information

  How much juice will the costumer purchase in a month

how much juice will the costumer purchase in a perticular month. What is the elasticity of demand for juice.

  Illustrate what role does economics play

Illustrate what role does economics play in your personal decisions and or those of your organization.

  Effect of decrease in price of substitute good

Suppose that a competitive industry is in long Run competitive equilibrium. Then the price of substitute  good (in consumption) decreases. What will happen to the short run to

  Elucidate your answers in terms of the market

Elucidate your answers in terms of the market for lawyers fully explaining what changes will occur to demand, supply, quantity demanded, quantity supplied, and equilibrium price for lawyers

  Required to find out an articles about price elasticity

Required to find out an articles about price elasticity in the home building industry

  A no of empirical studies of automobile demand

A no of empirical studies of automobile demand yielded the subsiquent estimates of income and price elasticities

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Explain the most important economic political

Explain the most important economic, political or social issue facing the United States.

  Maximizing return ratio

If you have a certain amount of money invested in stock market for a moment of time, then there is an expected return on that investment, and a risk, a variance in that return, both of which are proportional to the amount you have invested.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd