1. Consider a competitive industry with firms that have these cost functions: TC = q -...

 

Transcribed Image Text:

1. Consider a competitive industry with firms that have these cost functions: TC = q³ - 8 q² + 24 q AC(Q) set p=mc AC = q² - 8 q + 24 = + 24 (9-4)² + 8 TR = Q •P MR MC = = 3q² 16 q In the short run, if P = 20, a. What q will the firm produce? (Feel free to round off but show your work.) b. What TT will the firm make? (Feel free to round off but show your work.) TT-T 2. In the long run, for the same TC, AC, and MC as #2: a. Show what quantity each firm will produce on a graph of the company's AC. b. What P will the firms charge? Why? c. What quantity will the industry produce if D is (show your work): P = 1008 2Q d. How many firms will there be? Show your work. 3. Evaluate the efficiency of this competitive firm in short run and long run equilibrium. 4. What happens in a competitive industry in the long run when firms enter because profits were being made in the short run? 5. What use is the competitive model if no truly competitive firms exist? 1. Consider a competitive industry with firms that have these cost functions: TC = q³ - 8 q² + 24 q AC(Q) set p=mc AC = q² - 8 q + 24 = + 24 (9-4)² + 8 TR = Q •P MR MC = = 3q² 16 q In the short run, if P = 20, a. What q will the firm produce? (Feel free to round off but show your work.) b. What TT will the firm make? (Feel free to round off but show your work.) TT-T 2. In the long run, for the same TC, AC, and MC as #2: a. Show what quantity each firm will produce on a graph of the company's AC. b. What P will the firms charge? Why? c. What quantity will the industry produce if D is (show your work): P = 1008 2Q d. How many firms will there be? Show your work. 3. Evaluate the efficiency of this competitive firm in short run and long run equilibrium. 4. What happens in a competitive industry in the long run when firms enter because profits were being made in the short run? 5. What use is the competitive model if no truly competitive firms exist?

Answer rating: 100% (QA)

1 a In order to find the quantity q that the firm will produce when P 20 we need to use the formula P MC Rearranging this equation to solve for q we get q P163 20163 8 b The firms profit is equal to t... View the full answer