microecon

Problem 1 List the conditions than need to hold for a long run competitive equilibrium. Problem 2 A number of stores offer film developing as a service to their costumers. Suppose that each store that offers this service has a cost function C(q)=50+0.5q+0.08q2 . (a) If the current rate for developing a roll of film is $8.5, is the industry in long run equilibrium? Explain. (b) If the firm is not in a long run equilibrium, find the price associated with long run equilibrium. (c) Suppose now that a new technology is developed which will reduce the cost of film developing (total cost) by %25. Assuming that the industry is in long run equilibrium, how much would any one store be willin... click for more

Producers, consumers, and competitive markets

Suppose that a competitive firm's marginal cost of producing output q is given by MC(q)=3+2q. Assume that the market price of the firm's product is $9. a. What level of output will the firm produce? b. What is the firm's producer surplus? c. Suppose that the average variable cost of the firm is given by AVC(q)=3+q. Suppose that the firm's fixed costs are known to be $3. Will the firm be earning a positive, negative, or zero profit in the short run?

microecon

Assignment 6: Profit maximization and Competitive Supply Due Tuesday, November 30, 2004 List the conditions than need to hold for a long run competitive equilibrium. Problem 2 A number of stores offer film developing as a service to their costumers. Suppose that each store that offers this service has a cost function C(q)=50+0.5q+0.08q2 . (a) If the current rate for developing a roll of film is $8.5, is the industry in long run equilibrium? Explain. (b) If the firm is not in a long run equilibrium, find the price associated with long run equilibrium. (c) Suppose now that a new technology is developed which will reduce the cost of film developing (total cost) by %25. Assuming that th... click for more

Competitive Markets

Suppose you are given the following information about a particular industry: QD = 6500 - 100P Market Demand QS = 1200P Market Supply C(q) = 722 + q2/200 Firm total cost function MC(q) = 2q/200 Firm marginal cost function Assume that all firms are identical and that the market is characterized by pure competition. a. Find the equilibrium price, the equilibrium quantity, the output supplied by the firm, and the profit of each firm. b. Would you expect to see entry into or exit from the industry in the long run? What effect will entry or exit have on market equilibrium? c. What is the lowest price at which each firm would sell its output in the long run? I... click for more

Long-Run Equilibrium

A number of stores offer film developing as a service to their customers. Suppose that each store offering this service has a cost function C(q) = 50 + 0.5q + 0.08q2 and a marginal cost MC = 0.5 + 0.16q. Q: If the going rate for developing a roll of film is $8.50, is the industry in long-run equilibrium? If not, find the price associated with long-run equilibrium.