User Account

All Pages

Output and the resulting profit

Assignment Help Business Economics
Reference no: EM131605709

(i) A competitive firm's short run total cost function is given by

TC = Q2 + 40 Q + 81

(a) Determine the range of prices for which the firm incurs a loss but continues to produce. Also determine the range of prices for which the firm earns a profit.

(b) Calculate the profit maximizing output and the resulting profit when price is $100.

(ii) Propylene is used to make plastic. The propylene industry is perfectly competitive and each producer has a long run total cost function given by

Q 40Q 6Q 31 LTC 2 3

Where Q denotes the output of the individual firm.

The market demand for propylene is

X = 2200 - 100P

Where X and P denote the market output and price respectively.

(a) Calculate the optimal output produced by each firm at the long run competitive equilibrium (LRCE).

(b) Calculate the market price and market output at the LRCE.

(c) Calculate the number of firms at the LRCE.

(d) Suppose the demand curve shifts to

X = A - 100P

Where A is a positive number. 3

Calculate how large A would have to be so that in the new LRCE, the number of firms is twice what it was in the initial equilibrium.

(iii) Suppose that Saudi Arabia lets other members of OPEC sell all the oil they want at the existing price which the Saudis set and other members accept. The daily world demand for OPEC oil is given by:

P = 88 - 2Q

where P is the price per barrel of oil and Q the total quantity of OPEC oil (in millions of barrels per day). The supply function for other members of OPEC who behave like a "competitive fringe" is given by:

Qr = .6P

The Saudis' cost of production of oil is given by:

TCs = 15Qs +20

where Qs is the daily output of oil produced by the Saudis.

Calculate the price that Saudi Arabia will set to maximize its own profit. Also calculate the optimal output and profit of the Saudis. Determine the output produced by other members of the OPEC as well as the total market output.

(iv) A monopolist produces a product in one central production facility using the cost structure: TC = (1/2) Q2 +300 and sells it in two different markets with the following demand functions:

Market 1: P1 = 60 - (1/4)Q1

Market 2: P2 = 80 - (1/2)Q2

where Q =Q1 + Q2

Calculate the amounts of outputs, Q1 and Q2 that the monopolist should produce and the prices that it should charge if it wants to maximize total profit. Calculate the amount of total profit.

Reference no: EM131605709

Questions Cloud

Find the mrs for linda for any given bundle : a) Find the MRS for Linda for any given bundle (S, J). b) Find Linda's optimal consumption bundle.
How will you execute the plan : What do the experts recommend the content to be .Use chapter nine for the steps of an activation plan. How will you execute the plan?
Identify and describe three leadership styles : Identify and describe three leadership styles and critically analyse how each of these leadership styles may or may not promote patient safety
Monies in the local economies : Assume that before the currency crises in Mexico in 1994 and in Thailand in 1997 that foreign investors were fueling booms in those two countries.
Output and the resulting profit : Calculate the profit maximizing output and the resulting profit when price is $100.
Discuss how organizational design is linked to behavior : Discuss the elements of organizational designs and how organizational design is linked to organizational behavior, communication, delegation
How is bias reflected in the history you are taught : How is the education you receive targeted toward the majority of students at your college? How is bias reflected in the history you are taught.
Employs salesmen to find new advertisers : Oscar's Outdoor Signage employs salesmen to find new advertisers for existing signs. In an average month
Services for a number of apartment complexes : An apartment owner has contracted for lawn mowing services for a number of apartment complexes he owns. He negotiated a price per month but the scope of service

Reviews

Write a Review

Business Economics Questions & Answers

  Relationship between economic profits and quasi-rents

Since Herbert Mohring regards the cost of widget capital as the fixed cost effectively, what can you conclude about the relationship between economic profits, quasirents and the cost of capital?

  Analyze the perfect bayesian equilibrium of this game

B is offering to buy an object from S. S values the good at $4 ( type H), or $3 (type M), or $2 (type L). But S's exact valuation is unknown to B, who simply attaches equal probabilities, a fact commonly known to both players. B values the good at $5..

  Electoral competition model

You can suppose any single peaked preference which you want and Characterize the equilibria of the model.

  Warning about use of magic-spells

Warning about use of magic/spells (by whom?) Death of Pelias (how?) Death of Glauce (how?) Death of children (how/ by whom?)

  The fed has since ended its quantitative easing policy

The Fed has since ended it's quantitative easing policy and has stuck with leaving interest rates at 0%. For the past 6 months the Fed has been toying with the idea of gradually increasing the rates. It has yet to do so even though many "Experts" hav..

  Draw a market for portable generators in equilibrium.

Not too long ago Hurricane Sandy hit the northeast portion of the United States, causing serious and costly damage. Given what you've learned this week, what can we conclude probably happened to the price of portable generators? To the price of food?..

  Relative share of earnings going to labour versus capital

There are a number of measures of aggregate economic activity, such as GDP, GNP, national income, personal income, and disposable personal income. Each of these measures can be a good indicator depending on the issue under consideration. the relative..

  Income doubles and prices stay unchanged

Max has the utility function U(x, y) = x(y + 1). The price of x is $2 and the price of y is $1. Max’s Income is $11. How much x does Max demand? How much y? If his income doubles and prices stay unchanged, will Max’s demand for both goods double?

  Identify the demand function and the supply function

The market for grapes is given by the following supply and demand equations: Q = 120 – 15P Q = 20 + 5P a. Identify the demand function and the supply function. b. Compute for the equilibrium P* and Q* (Q*, P*). c. Compute the PED at (Q*,P*) AND the P..

  Advertising in monopolistically competitive market

Why do firms from each of the following categories become multinational? Identify the competitive advantages that a firm in each category must have to be a successful multinational. Which of the following can occur as a result of advertising in a mon..

  What you considered your potential production

Discuss some instances in your life when your actual production for short periods exceeded what you considered your potential production. Why does this occur only for brief periods?

  Offered to deliver two trade in vehicles

Jessie Romero offered to deliver two trade in vehicles- a 2003 Mitsubishi Montero and a 2002 Chvrolet Silverado pickup- to Scoggin-Dickey Chevrolet Buick, inc,. in exchange for a 2006 Silverado pickup. Scoggin-Dickey agreed.  did the dealership have ..

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