Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
1. "In the long-run equilibrium, every firm in a competitive industry earns zero profit. Thus, if
price falls, all of these firms will be unable to stay in business." Do you agree with this
statement? Why, or why not?
2.
D: P = 75 - 1.5Q
S: P = 25 + 0.5Q
The demand and supply for a type of carpet known as KS-12 has been estimated in the above
equations (where P is the price ($/yard), and Q is output (thousands of yards per month)). A
typical competitive firm that markets this type of carpet has a marginal cost of production
given by
MC = 2.5 + 10q.
a. Determine the market equilibrium price and quantity for this type of carpet.
b. Determine how much the typical firm will produce per month at the equilibrium price.
c. If all firms had the same cost structure, how many firms would compete at the equilibrium
price computed in part a.?
d. Calculate the producer surplus the typical firm receives.
3. Assume the market for tortillas is perfectly competitive. The market supply and demand
curves for tortillas are given as follows:
D: P = 11 - .00002Q
S: P = .000002Q
The short run marginal cost curve for a typical tortilla factory is:
MC = .1 + .0009q
5. What effect would the following taxes have on a monopolist’sprice and quantity?
a. A franchise tax. (A lump sum paid each year for the right to do business.)
b. A profits tax. (Taking a constant percentage of profits.)
c. A specific tax. (i.e., 10 cents per unit sold.)
d. Is it possible for the price to the consumer to increase by more than the amount of the
specific tax? Why?
6. You are the manager of a monopoly, with the following demand and cost functions:
D: P = 200 – 2Q
b. What price and output would prevail if this firm’s product were sold by a price-taking
firm in a perfectly competitive market?
8. You are the manager of a monopolistically competitive firm, and your demand and cost
functions are:
D: Q = 20 – 2P