In the Cournot model, when a new firm begins production it assumes its demand curve is Question 6Answer a. the market demand less the amount the other firm is selling. b. the market demand plus the amount the other firm is selling. c. one-half of the competing firm's demand curve. d. the same as the competing firm's demand curve.
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- 3. A local firm produces three types of pizza, for delivery to homes in the area. The owners have completed research, to discover the demand curves for each of the three pizzas. The schedules are shown below: (Quantities are per week). Price Pizza A (Qd) Pizza B (Qd) Pizza C (Qd) 12 800 100 11 840 200 10 880 400 300 9. 920 800 400 8 960 1200 500 1000 1600 600 1040 2000 700 1080 2400 800 Plot the three demand curves, on one graph. a) Calculate the Market demand for Pizza. b) Calculate Price Elasticity of Demand for all three pizzas over the price range £9 to £10. c) For pizza C only, what price must be charged if the firm wishes to maximize its sales revenue? IIThe consumers’ surplus when the market is perfectly competitive and when itsmonoplized. Show in graph and explain.3. Johnny Rockabilly has just finished recording his latest CD. His record company's marketing department determines that the demand for the CD is as follows: Price Number of CDs $24 10 000 22 20 000 20 20 30 000 18 40 000 16 50 000 14 60 000 The company can produce the CD with no fixed cost and a variable cost of $5 per CD. a. Find total revenue for quantity equal to 10 000, 20 000, and so on. What is the marginal revenue for each 10 000 increase in the quantity sold? b. What quantity of CDs would maximize profit? What would be the price? What would be the profit? c. If you were Johnny's agent, what recording fee would you advise Johnny to demand from the record company? Why?
- Using graph, explain when the firm in a competitive market is in equilibrium?Suppose pretzel stands in New York City are aperfectly competitive market in long-run equilibrium.One day, the city starts imposing a $100 per monthtax on each stand. How does this policy affect thenumber of pretzels consumed in the short run andthe long run?a. down in the short run, no change in the long runb. up in the short run, no change in the long runc. no change in the short run, down in the long rund. no change in the short run, up in the long runQUESTION 3 Figure: Cost Curves for Corn Producers Price, cost of bushel $30 26 22 18 14 10 مان 6 2 0 1 MC 2 3 4 5 6 7 Quantity of corn (bushels) ATC AVC The market for tomatoes is perfectly competitive. The market price of a bushel of tomatoes is $18. At the profit ]maximizing quantity of output in the figure, the farmer's total revenue is , total cost is , and profit is
- at the optimal output , what price will do drop in chrge and what will be its output?Price $ Output in units Also at the optimal price and output , what will be its total revenue, total cost and total lost .Please calculate the points on the graph. Please provide solutionexplain your answers in detail and use graphs whenever appropriate: The market for rental cars is very competitive. How would the following developments affect the quantity of car rentals that a typical rental car company wants to supply in the short run? a. With the easing of fears about Covid 19, people are more excited to travel than before. b. Local governments reduce the yearly fee that rental car companies have to pay for their facilities. Note, these fees do not vary with how many cars the company rents. c. Rental car companies have to pay higher wages for their workers. Suppose that initially the market for rental cars is in long-run equilibrium. a. What does the fall in the yearly fee rental car companies have to pay for their facilities do to the profits of a typical rental car company in the short run? b. What will happen to the equilibrium price and quantity of rental cars in the long run? Why? What will happen to the profits of a typical rental car company in the long run?Basti’s Coffee operates in a competitive market. The short run price in the coffee market is equal to Basti’s Coffee average variable cost. a. Using two correctly labeled graphs show the coffee market side by side with Basti’s Coffee. Clearly indicate which graph represents the market and which represents Basti’s Coffee. In your graph identify: i. price and quantity in the coffee market (3) ii. price and quantity for Basti’s Coffee (3) iii. The area of economic profit or loss for Basti’s Coffee (3)
- 1. The market for manicures and other nail treatments is very competitive. How would the following developments affect the number of nail treatments that a typical nail salon wants to supply in the short run? a. Heightened concern about their appearance causes people to want more manicures at a given price. b. The government requires all nail salons to pay a new yearly licensing fee to operate. c. Worse job prospects elsewhere in the economy cause more people to want to become manicurists, causing the wages of manicurists to fall.JYour business has the capacity to produce up to 5 units/week. The table & graph below show average cost (AC) for different weekly production levels. Your objective is to maximize profit each week. Average Cost 22 20 AC 18 1 20 14 2 15 12 3 12 10 1 2 4 4 13 Quantity 15 Your product sells in the market for $21/unit, and you can sell as many units at that price as you can bring to market. You know from your economics training that deciding how much to produce should rely on marginal concepts like marginal cost (MC). So, based on the AC table above, create a table that shows the MC of each unit. (Assume that there are no fixed costs, so total costs are zero if Q=0.) Based on MC for each unit, determine the profit-maximizing quantity to produce and sell. BRIEFLY explain your answer. (Your answer needs to be based on MC and being able to sell each unit for $21.) AC ($/unit)What would happen in the long if the firm produces 84 units and charges $28? PRICE D ## 10 0 1 10 QUANTITY() ATC a. Firm will exit from the industry. b. Firm will stay in the industry. c. Firm will either stay in the industry or exit from the industry. d. Firm will stay in the industry whether it earns profits or losses.