3] Assume several identical firms have the short run production function Q = √40L and pay a wage of 10 for each unit of labor employed. Fixed costs for each firm are 100. The market demand for the good is Qd = 100,000 -25P. How many firms are in the industry in the long run?

The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC ATC of Ear Buds ($) ($) 20 1.00 25 2.00 1.20 30 2.46 1.41 35 3.51 1.71 40 4.11 2.01 45 5.43 2.39 50 5.99 2.75 55 8.47 3.27 Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds? 2$ c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? 2$

3. A firm has a production function given by 1 1 A) y = 4x³x² ; 1 1 B) y = 3x4x² ; a) What are the factor demand functions? b) What are the conditional factor demand functions? c) What is the cost function? d) What is the supply function? 1 1 C) y = 5x³x2; 11 D) y = 12xx².

2. Consider a market with 90 firms, each firm has a short-run total cost function as follows: TC(q) = 5q2, and a marginal cost function: MC(q) = 10q. Market demand is given by equation Qd(p) = 200 - p. a) What is the fixed cost? Solve the average variable cost function in the short-run.  b) What is the supply function of each firm?  c) Solve for the short-run equilibrium outcome: P*, Q* and q*.  d) What is one firm's economic profit in this market?