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ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Assuming a linear
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- The demand curve for product a is given as Q = 2000 - 20P. a. How many units will be sold at $10? b. At what price would 2,000 units be sold? 0 units? 1,500? c. Write equations for total revenue and marginal revenue (in terms of Q). d. What will be the total revenue at a price of $70? What will be the marginal revenue? e. What is the point elasticity at a price of $70? f. If price were to decrease to $60, what would total revenue, marginal revenue, and point elasticity be now? g. At what price would elasticity be unitary?arrow_forwardAgribusiness firm ABC is the only buyer of good X. The demand for X is P-140-2Q, where P is the price per unit in USD per unit, and Q is 1000s of good X. The supply of is P=20+Q, this is the AE of X. If ABC were in a competitive industry, the equilibrium price would be? 36 40 60 32arrow_forwardPlease diagram the revenue and profit situation (which would also include the cost curves) for a producer of a highly elastic (but not perfectly elastic) good of your choice (a restaurant, boutique clothing store, etc.). Under what circumstances would it make sense for them to raise their price? While profit maximization is the main goal for most firms (and one which you should be able to represent on a diagram), you may wish to consider alternative goals depending upon the business you have chosen.arrow_forward
- All markets that are not perfectly competitive have which of the following characteristics? Each firm's marginal revenue is always equal to the market price. The product that each firm sells has no close substitutes. Firms in the market have some control over price, that is, each firm faces a downward sloping demand curve. Firms will produce a level of output where marginal cost equals the minimum level of average cost.arrow_forwardWhich of the following companies are most likely to face a nearly horizontal demand curve? Group of answer choices Companies (like Netflix) offering programs on television or computers Companies offering search engines on the Internet clothing retail stores offering their goods on the Internet The wholesale oil industry.arrow_forwardFruit market (a perfectly competitive market), the industry demand and supply of tomato (a homogenous product) is given by the following equations respectively: Qd = 50 − P Qs = 1 + 3P The typical firm’s total cost is given by the following equation: TC = 10 + 0.5Q2 + 5Q What is the equilibrium price and quantity in this market? What is the firm’s MC function? What is the MR function? What is the profit maximizing level of output for the firm? How much profit is this firm earning? Show it graphically Is it short run or long run? Explain!arrow_forward
- Pick the correct answer and explain in stepsarrow_forwardSuppose that the jackfruit industry is initially operating in long-run equilibrium at a price level of $5 per pound of jackfruit and quantity of 75 million pounds per year. Suppose a top medical journal publishes research that animal-alternative protein sources such as jackfruit could decrease your expected lifespan by 5 years. The publication is expected to cause consumers to demand jackfruit at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the publication. 2 1 10 9 8 Supply Demand 0 0 + 15 30 45 60 75 90 105 120 135 150 QUANTITY (Millions of pounds) In the long run, some firms will respond by + 1 } Demand Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the publication and the new long- run equilibrium after firms and consumers finish adjusting to the news. 2 1 10 9 Supply Demand B…arrow_forwardPlease get correct.arrow_forward
- Suppose you own fast food takeaway shops, one in Glebe, with lots of competition, and one in Tibooburra, with little competition. In Glebe, the price elasticity of demand is -2.5, while in Tibooburra, it is -2.0. Assume the marginal cost of providing a combo burger is $10. What are the optimal prices of a combo burger in each location?arrow_forwardConsider a market with the following demand curve: Q^d=1000-Yxp Assume the marginal cost of the only firm supplying this market as MC=Q/2 A.Derive an expression of elasticity of demand in terms of Y. Show your work B.Derive an expression for the slope of the isoprofit curve of this firm in terms of Y. Explain. |c.Now derive an expression for the markup chosen by this firm in terms of Y. d.What happens to the elasticity (part a) and the markup (part c) if Y goes up? What can you say about the relationship between elasticity and the markup from this observation? Explain. e.calculate the profit-maximizing quantity andarrow_forwardDetermine whether the following statements are TRUE or FALSE. Explain your answer using graphs or examples. a. If a firm has zero elasticity substitution between inputs, then the short-run cost of producing a level of output equals the long-run cost. b. For firms in a competitive market, producing a maximizing profit quantity always means minimizing cost, while the reverse is not true.arrow_forward
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