Determine the long-run price established in this market

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Reference no: EM131066548

1. A firm has the following total cost function

T C = 6Q2 - 12Q + 87.5 for Q > 2

(a) Find the break-even levels of output if the market price is $38.

(b) Show that the profit maximizing level of output is the average of the two break-even levels.

2. Assume all firms in a competitive industry have the following cost function

T C = Q3 - 40Q2 + 1600Q + 1500

(a) If the market price for this good is $1400 per unit, determine a typical firm's break-even level(s) of output.

(b) What is a typical firm's profit maximizing level of output.

3. All firms in a competitive market have the following total cost function:

T C = 0.5Q3 - 12.5Q2 + 125Q + 3200

The market demand and supply functions are given by

Qmd = 16500 - 60P Qms = -3500 + 40P

(a) What is a typical firm's optimal level of output?

(b) What is the firm's profit or loss?

4. Assume no change in the cost structure of the firms and in demand in the previous problem,

(a) Determine the long-run price established in this market.

(b) What is a typical firm's output in the long-run?

(d) What is the long-run equation of the supply function?

Reference no: EM131066548

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