Marginal cost of ?rm at equilibrium, Corporate Finance

Assignment Help:

Problem: Firm 1 produces cars and the total cost of producing q cars is given as C(q) = 2q2 + 5q.

a) Assuming the ?rm operates in a perfectly competitive market. Write down the pro?t function of the ?rm and solve for the ?rst order condition. What is the supply curve of the ?rm?

b) Suppose ?rm 2 also produces cars at a cost of C(q) = 3q2 . What is the supply curve of this ?rm?

c) Solve for the aggregate supply curve of cars. Illustrate this in a diagram.

d) Is it e?cient if both ?rms produce 10 cars? Why or why not?

e) Suppose there are 2 consumers. Both consumers have individual demand functions of p = 20 - 2qi for cars. What is the aggregate demand curve? Illustrate in a diagram.

f) What is the market equilibrium (where price equals demand). What is the equilibrium quantity and price? How much does each ?rm produce and how much does each consumer consume at the equilibrium.

g) What is the marginal cost of each ?rm at the equilibrium? What is the marginal willingness to pay of each consumer at the equilibrium? Is the equilibrium Pareto optimal?


Related Discussions:- Marginal cost of ?rm at equilibrium

Efficiency, differentiate between aloocative effiency and pricing effiency

differentiate between aloocative effiency and pricing effiency

Procter and Gamble, Summarize the key statistics for the stock and the indu...

Summarize the key statistics for the stock and the industry (choose 8 items you believe informative, such as P/E ratio, market capitalization, dividend yield, ROE, sales etc.tion..

INVESTMENT DECISION, YOU ARE A CEO OF A SOFTWARE COMPANY WHICH HAS LIMITED ...

YOU ARE A CEO OF A SOFTWARE COMPANY WHICH HAS LIMITED ACCESS TO DEBT EQUITY MARKETS. YOUR FIRMS AVERAGE RETURN ON LAST YEAR PROJECTS IS 28% AND COST OF CAPITAL IS 12 %.Would Npv or

Stock exchange, considering floatation on the stock exchange, produce a rep...

considering floatation on the stock exchange, produce a report explaining advantage of such a move

Calculate the price of maturity assuming, a)    Calculate the price of a Eu...

a)    Calculate the price of a European style call option with 6 months left to maturity assuming a risk-free rate of 3.5% and a non-dividend paying stock which can change in price

Report on the budgeted versus actual outcomes, You are required to provide ...

You are required to provide a report of approx 500 words or less (excluding attachments and references), accompanied by relevant calculations, in MS Word, MS Excel and/or PDF forma

Accumulative swing index - asi, It is an indicator used by traders to judge...

It is an indicator used by traders to judge a security's long-term trend by comparing bars which comprise its closing,   opening, high and low prices during a specific period of ti

Experts averag - forecasting methods, This method simply calculates the ave...

This method simply calculates the average of a number of expert estimates. Let E denote the number of experts, and mn,e denote the forecast of expert e, e =1, ... ,E, for SKU n 2N.

Economic value added-cost of equity , Course assessment: Company direct...

Course assessment: Company directors often believe that the stock market fails "correctly" to value the firms they manage, while investors are often alarmed by the volatility i

Write Your Message!

Captcha
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!

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