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Profit maximization and Competitive Supply
List the conditions than need to hold for a long run competitive equilibrium.
1. A number of stores offer film developing as a service to their costumers. Suppose that each store that offers this service has a cost function C(q)=50+0.5q+0.08q2 .(a) If the current rate for developing a roll of film is $8.5, is the industry in long run equilibrium? Explain.(b) If the firm is not in a long run equilibrium, find the price associated with long run equilibrium.(c) Suppose now that a new technology is developed which will reduce the cost of film developing (total cost) by %25. Assuming that the industry is in long run equilibrium, how much would any one store be willing to pay to purchase this new technology?2. You are given the following information about a particular industry:
Qd=6500-100PQs=1200Pc(q)=722+q^2/200
Where QD is the market demand, QS is the market supply and MC(q) is the firm total cost function.Assuming that all firms are identical, and that the market is characterized by pure competition,(a) Find the equilibrium price, the equilibrium quantity, the output supplied by each firm and the profit of the firm in the short run.(b) Would you expect to see entry into or exit from the industry in the long-run? Explain. What effect will entry or exit have on market equilibrium?(c) What is the lowest price at which each firm would sell its output in the long run? Is profit positive, negative or zero at this price? Explain.
Two articles Fed Official Expects Growth also Are Inflation Expectations Rising from the Ashes. Illustrate what exactly is the Federal Reserve.
What is the profit maximizing output level for the typical firm? (Hint: Calculate MC for each change in output, then find the equilibrium price, and calculate MR for each change in output)
Explain what happens to the nation's aggregate supply curve, the short-run equilibrium level of output, and the price level if:
What was the cross-exchange rate between the Real and the Peso in 2001? Real____/Peso. What was cross-exchage rate between Real and Peso in 2002? Real_____/Peso.
Mention and describe the three theories for why the short-run aggregate-supply curve is upward sloping.
If Deltas managers needs to follow a constant payout ratio dividend policy
Describe events that might lead to a disequilibrium in the market for gasoline.
Limit your reaction to stratigies which can work and reasons for their success.
marketplace labor demand is typically more elastic in absolute value than market labor supply. A person who has a substitution effect that dominates his income effect will increase hours worked when an income tax is imposed.
Suppose that a perfectly equal distribution of income existed in Disneyland. Which of the reccent residents would have the same income he or she has in present distribution?
Explain briefly why capital is the fixed factor in the short run, and not labor.
Customer demand for gasoline changes when the price of gasoline falls.
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