Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 11.6, Problem 4QQ
To determine
Difference between the equilibrium price and consumer-willing price.
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price
aggie to
d. How much output does each firm produce?
e. Calculate each firm's profit.
f.
Using market demand and supply functions (QD, QS):
i. Graphically represent the equilibrium in the market;
ii. Calculate producer surplus; and
iii.
Consumer surplus in this competitive equilibrium.
Find
a. Optimize the production function Q = 4K² - 2KL + 6L² subject to constraint
k+ L = 72 and find the value of Q at the point of optimization
b. The demand and supply function of Adofo enterprise are given P(Qa) = (Qu - 5)²
and P(Q) = Q² + Q, +3 respectively.
i.
ii.
iii.
iv.
the equilibrium price and quantity
the consumer surplus at the equilibrium point
the producer surplus at equilibrium point
Represent the equilibrium price, consumer and producer surplus on a
diagram
A subsidy is defined as
a payment that must be made to the government whenever a good
or service is sold.
the number of trades that are eliminated from a market when a tax
is imposed.
O the difference between total revenue and total cost for a business
firm.
a payment to either the buyer or seller of a good or service, usually
on a per-unit basis, when a good or service is purchased.
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Similar questions
- Suppose a competitive market is comprised of firms that face identical cost curves. The firms experience an increase in demand that results in positive profits for the firms. Which of the following events are then most likely to occur? (i) New firms will enter the market. In the short run, price will rise; in the long run, price will rise further. In the long run, all firms will be producing at their efficient scale. a. (i), (ii) and (iii) b. (i) and (iii) only c. (i) and (ii) only d. (ii) and (iii) onlyarrow_forwardWhen is the profit a firm earns equal to the producer surplus? Explainarrow_forwardThe area under the demand curve but above the equilibrium price is called: a) consumer surplus. b)producer surplus. c)accounting profit. d)economic profit.arrow_forward
- a. A firm faces the following average revenue (demand) curve:P = 120 − 0.02Qwhere Q is weekly production and P is price, measured in cents per unit. The firm’s cost function is given by C = 60Q + 25,000. Assume that the firm maximizes profits. i. What is the level of production, price, and total profit per week?ii. If the government decides to levy a tax of 14 cents per unit on this product, what will be the new level of production, price, and profit?arrow_forwardThe city government is considering two tax proposals: • A lump-sum tax of $300 on each producer of hamburgers. • A tax of $1 per burger, paid by producers of hamburgers. Which of the following statements is true as a result of the lump-sum tax? Check all that apply. оооо Marginal cost will decrease. Average total cost will remain unchanged. Average fixed cost will increase. Average variable cost will remain unchanged.arrow_forwardPrice and Costs MC Firm -+ LAVO I I Quantity If firms in the market are producing output but are currently making economic losses, in the market, and indicates the corresponding supply curve. The total quantity supplied to the market will decrease. Average total cost will decrease. The price of fertilizer will increase. Price The quantity supplied by each firm will decrease. Demand Marginal cost will decrease. Market I I Quantity S₂ Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. S (?) illustrates the present situation for the typical firmarrow_forward
- At Emily's bagel shop, the cost to make a homemade bagel is $3 per bagel. As a result of selling three bagels, Emily experienced a producer surplus of $19.50. Emily must be selling her bagels for 1. $6.50 each 2. $7.50 each 3. $9.50 each 4. $10.50 eacharrow_forwardGiven: A. Daily demand curve for potato is Demand: Q = 1500 − 15P B. Long-run supply curve for potato is Q = 12P − 120 Note: QD demand in kilos per day and P is price per kilos. Question: 1. What is the long-run equilibrium Price and Quantity?2. Based on your answers in (1), what is consumer surplus at this equilibrium? What is producer surplus at this equilibrium?arrow_forward13. Firms in Competitive Markets The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be less than average total cost. Price and Costs The price of fertilizer must be less than marginal cost. The price of fertilizer must be equal to average variable cost. The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves. MC Firm ATC LAVC II II Quantity (? P P₂ Demand 1 Market Quantity S₁ S₂ (?)arrow_forward
- Producer surplus is defined as The area above MC and above the price of output The area below the market price of output and above supply The area above AVC and below ATC The area below supply and above the price of outputarrow_forwardSuppose the celery industry is competitive. The (inverse) market demand schedule is: p= 1000.1QD The (inverse) market supply schedule is: Find the following in equilibrium. a. Competitive market output level = b. Competitive market price = $ c. Consumer surplus = $ d. Producer surplus = $ MC = 4+0.2Qs unitsarrow_forwardQuestion 14: When the work artists put into their craft exceeds any reasonable expectation of profit or even a break-even return creates a _____. A Demand market B Supply market C Irrational market D Equilibrium marketarrow_forward
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