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MBAA 523 set 5 question

Question # 00042086
Subject: Economics
Due on: 01/19/2015
Posted On: 01/19/2015 01:12 AM
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Prof.Tile
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1. For each of the following market structure characteristics, insert the correct Market Type(s). There may be more than one. Use these abbreviations: PC – perfect competition; MC – monopolistic competition; and M – monopoly.

 Market Structure Characteristic Market Type Advertising is not effective for the individual firm. MRMR Product is unique. In equilibrium, products cannot be produced at a lower cost or sold at lower price. Economies of scale are often a barrier to entry. Products have many close substitutes.

2. Assume a perfectly competitive market structure. Complete the diagram to show the profit maximizing price and quantity. Label each (use Insert textbox). Is the firm earning economic profits or losses? If so, what will occur over the long-term?

3. A firm sells its product in a perfectly competitive market where other firms charge a price of \$80 per unit. The firm’s costs are C(Q) = 40 + 8Q + 2Q2. Show your computations.

a. How much output should the firm produce in the short-run?

b. What price should the firm charge in the short-run?

c. What are the firm’s short-run profits?

d. What adjustments should be anticipated in the long-run?

4. Complete the diagram showing the profit maximizing price and quantity. Label each. Show and label the deadweight loss (In MS Word, use Insert/Curved Connector, a curved line).

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5. A firm is a monopoly with demand and cost functions given by P = 200 – 2Q and C(Q) = 2,000 + 3Q2respectively. Show your computations.

a. Show the equations for MR and MC.

b. Compute the profit maximizing quantity.

c. What is the price at the profit maximizing quantity?

d. Compute total revenue.

e. Compute total cost.

f. What are the profits?

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MBAA 523 set 5 question

Tutorial # 00040871
Posted On: 01/19/2015 01:31 AM
Posted By:
neil2103
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Tutorial Preview …523…
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MBAA_523_set_5_question.doc (58 KB)
Preview: Label xxxx (use xxxxxx textbox) Is xxx firm earning xxxxxxxx profits xx xxxxxx If xxx what will xxxxx over the xxxxxxxxx Since xxxxxx xxx made, xxxxx will exit xxxxxxxx Price will xxxx till xxx xxxxx make xxxxxx profits only(TRTC xx equilibrium) 3 x firm xxxxx xxx product xx a perfectly xxxxxxxxxxx market where xxxxx firms xxxxxx x price xx 80 per xxxx The firms xxxxx are xxxx xx 8Q xxx Show your xxxxxxxxxxxx a How xxxx output xxxxxx xxx firm xxxxxxx in the xxxxxxxxx Equate Mr xxxx Mc xx xxx Mr xxx 80 84Q x 72/4 18 x What xxxxx xxxxxx the xxxx charge in.....
MBAA_523_set_5_question.doc (58 KB)
Preview: should xxx firm xxxxxx in the xxxxxxxxx P 80 x What xxx xxx firms xxxxxxxxx profits TR-TC xxxx ( 408821818) xxx d xxxx xxxxxxxxxxx should xx anticipated in xxx long-run Since xxxxxxxx profits xxx xxxxx new xxxxx will enter xxx industry Price xxxx fall, xxxxxx xx firms xxxx rise till xxxxxx profits are xxxxxxxxxx 4 xxxxxxxx xxx diagram xxxxxxx the profit xxxxxxxxxx price and xxxxxxxx Label xxxx xxxx and xxxxx the deadweight xxxx (In MS xxxxx use xxxxxxxxxxxxx xxxxxxxxxx a xxxxxx line) profit xxxxxxxxxx price P xxx quantity x x A xxxx is a xxxxxxxx with demand xxx cost xxxxxxxxx xxxxx by x 200 2Q.....
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Tutorial # 00040872
Posted On: 01/19/2015 01:34 AM
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Tutorial Preview …+ xx + xxx Show your xxxxxxxxxxxx a How xxxx output xxxxxx xxx firm xxxxxxx in the xxxxxxxxxx b What xxxxx should xxx xxxx charge xx the short-run? x What are xxx firm’s xxxxxxxxx xxxxxxxx d xxxx adjustments should xx anticipated in xxx long-run? xxxxxx xx Output xxxxxxxx in short-run x = P(Q) xxxx = xxxxx xxxxxxxx cost xxxxxxxx C(Q) = xx Therefore For xxx perfectly xxxxxxxxxxx xxxxxxx the xxxxxxx Q occurs xxxxx MR=MC So x + xx xxx b) xxx firm "takes" xxx market price, xxxxxxxx \$80/unit xx xxx short xxx profits = xx In the xxxx run, xx xxxxxxxxx competitive xxxxxxx economic profit xxxx go to xxxx as xxxx xxxxx enter xxx market, driving xx supply driving xxxx price xxxxx xxxxxxxx profits xxx made new xxxxx will enter xxxxxx Supply xxxx xxxx so xxxx price falls xx the industry xxxx fall xx xxxxx will xxxxxx…
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