The handmade snuffbox industry is composed of 100 identical firms, each having short-run total costs given by: TC= 0.5q^2+ 10q+ 5. and short-run marginal costs given by: SMC = q + 10 Where q is the output of snuffboxes per day. a) What is the short-run supply curve for each snuffbox maker? What is the short-run supply curve for the market as a whole? b) Suppose the demand for total snuffbox production is given by: Q = 1100 - 50P. What will be the equilibrium in this market? What will each firm’s total short-run profit be? c) Calculate the total producer surplus at the equilibrium and show that it is equal to total industry profits plus industry short-run fixed costs.
The handmade snuffbox industry is composed of 100 identical firms, each having short-run total costs given by: TC= 0.5q^2+ 10q+ 5.
and short-run marginal costs given by: SMC = q + 10
Where q is the output of snuffboxes per day.
a) What is the short-run supply curve for each snuffbox maker? What is the short-run supply curve for the market as a whole?
b) Suppose the demand for total snuffbox production is given by: Q = 1100 - 50P. What will be the equilibrium in this market? What will each firm’s total short-run profit be?
c) Calculate the total
d) Suppose the government imposes a $3 tax on snuffboxes. What is the new
e) Calculate the total loss of producer surplus as a result of the
f) Calculate the total loss of
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