User Account

All Pages

Competitive market for hot dogs

Assignment Help Microeconomics
Reference no: EM13835497

Problem 1. Suppose that, in a large city, 200 identical street vendors compete in a competitive market for hot dogs.

1. Fore each vendor i, total costs to produce qi hot dogs is, Ci(qi) = 1/4 qi + 1/8qi2

What is the marginal cost function of each firm?

2. Given your answer from above, how many hot dogs will each vendor produce if offered a price of $4 per hot dog?

3. What is the aggregate supply curve for this market?

4. Let demand for hot dogs be Q = 2500-100P, what is the short run equilibrium price?

5. What is the total quantity of hot dogs sold in short-run equilibrium?

6. In the long run, would you expect this industry to experience entry or exit? Explain your answer.

Problem 2. In the same city as before, a new "wave" technology is discovered, firms using this new technology have a total cost function C˜i(qi) = 2qi+1/20 q2i. While the 200 existing firms keep their old technology. Ten new firms enter using "wave" technology.

The hot dogs produced by the two technologies are exactly the same (that is, the hot dogs are homogeneous). You may assume there is free entry in both technologies in the long run.

1. The promoters of "wave" technology point out that although it may appear more expensive at first, it benefits from greater "economies of scale" than standard technology. Explain what they mean, feel free to use a numerical example.

2. What is the individual supply curve of a firm using "wave" technology? Let q˜i(P) stand for the individual supply of a firm using the wave technology and qi(P) remain the individual supply of a firm using the original technology from Problem 1.

3. Given that there are now 200 "standard" firms and 10 "wave" firms, what is the aggregate supply curve for this market?

4. What is the new short-run equilibrium price in this market?

5. Is the market in long-run equilibrium? Explain why or why not.

6. You are hired as a consultant by a firm using wave technology. What do you suggest they do?

Problem 3. Suppose Monolith Enterprises has gained exclusive rights to sell ball point pens in State College. The demand for ball point pens is described by Q = 1500 - 10P, Monolith's total cost function for producing pens is C(Q) = 2Q.

1. What is the marginal cost function for Monolith?

2. Write down the monopolist's optimization problem, assume the monopolist chooses quantities.

3. What quantity of pins should Monolith produce?

4. What is the price at this level of output?

5. Is this outcome efficient? If so, why? If not, what is the efficient level of output?

6. What is the Lerner Index for Monolith?

7. Suppose Monolith's cost function changed to C(Q) = 10 + 2Q. Would Monolith's optimal quantity of pens be different? Explain why or why not.

Problem 4. The following firms compete within the same industry:

Name

Sales (millions)

ACME Industries

38

Beta Inc.

10

Caltech

15

Douglass Ltd.

4

Gramen Inc.

12

Houghton Enterprises

22

Jenentech

7

1. Use this information to calculate CR3

2. Calculate CR5 for the industry.

3. What is the HHI for the industry?

4. Can you use this information alone to calculate the Lerner Index? Explain why or why not.

Reference no: EM13835497

Questions Cloud

What is the ex-dividend price of a share : What is the ex-dividend price of a share in a perfect capital market - What net tax savings per share for an investor would result from this decision?
Do you think mr patel has any defense to the claim : In terms of the law of contract can they sue Mr Patel for the cost of R17 000.00 that they are now required to pay to rectify the errors. Assume that the electrical compliance boards report is correct. Do you think Mr Patel has any defence to the cla..
Marketing report for subaru automobile company : Marketing report for Subaru automobile Company
Compute the annual operating cash flow : (11%)  This printer will be fully depreciated by the straight-line method over its 7-year economic life, and will be sold for$60,000 at the termination of the 5-year project.  The variable costs are $26 per copy, and annual fixed costs are $80,000.  ..
Competitive market for hot dogs : Problem 1. Suppose that, in a large city, 200 identical street vendors compete in a competitive market for hot dogs.
Critique how well the organization adapts to change : Critique how well the organization adapts to change
Lean came to prominence in the academic literature : Lean came to prominence in the academic literature during the mid-1980s as a result of the increased curiosity surrounding the ‘secret’ of practical Japanese manufacturing techniques such as Just-In-Time (JIT) and the Toyota Production System (TPS) i..
National culture influences many facets of business : Prior literature suggests that national culture influences many facets of business operations including corporate governance, capital structure, managerial compensation, foreign direct investment behavior and accounting systems.
Operations and information management : You are asked to provide a critical discussion on the implementation of lean which addresses the following questions: 1)     Is there a best way to implement lean? Are all organisations suitable for lean implementation?

Reviews

Write a Review

Microeconomics Questions & Answers

  The free rider problem

Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.

  Failure of the super committee is good thing for economy

Some commentators have argued that the failure of the “Super committee” is good thing for the economy?  Do you agree?

  Case study analysis about optimum resource allocation

Case study analysis about optimum resource allocation: -  Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's productio..

  Fixed cost and vairiable cost

Questions:  :   Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month?  Explain your choice.

  Problem - total cost, average cost, marginal cost

Problem - Total Cost, Average Cost, Marginal Cost: -  Complete the following table of costs for a firm.  (Note: enter the figures in the  MC   column  between  outputs of  0 and 1, 1 and 2, 2 and 3, etc.)

  Oligopoly and demand curve problem

Problem based on Oligopoly and demand curve,  Draw and explain the demand curve facing each firm, and given this demand curve, does this mean that firms in the jeans industry do or do not compete against one another?

  Impact of external costs on resource allocation

Explain the impact of external costs and external benefits on resource allocation;  Why are public goods not produced in sufficient quantities by private markets?  Which of the following are examples of public goods (or services)? Delete the incorrec..

  Shifts in demand and movements along the demand curve

Describe the differences between shifts in demand and movements along the demand curve. What are the main factors which can shift the demand curve? Explain why they cause the demand curve to shift. Use examples and draw graphs to support your discuss..

  Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

  Long-term growth, international trade & globalization

Long-term Growth, International Trade & Globalization:- This question deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade sce..

  European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

  Development game “settlers of catan”

Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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