A competitive industry consists of numerous firms producing good x. The equilibrium price in this market...

 

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A competitive industry consists of numerous firms producing good x. The equilibrium price in this market is 100. The short-run variable cost curve for one of these firms which is already producing in this market is given by VC = 200 Q + 500 2 and the fixed cost for this firm is 1000. A) While producing, what is the firm's output, producer surplus, and the profit? B) Should this firm continue producing in the short-run or shut down? C) If this firm's production function represents all the firms in the market, do you think the short-run market supply curve will shift in the long run?explain D) If the input prices are constant, what would be the shape of the long-run supply curve? (2 points) An individual in this market has a utility function of U(x, y) = 2xy, y being a composite good with the price of 1. E) If this person has a budget of 1500 $, how many units of x and y would she consume? Assume government provides a subsidy of 1000 in the shape of a non-transferable coupon for good x for her, F) How many x and y will she consume with her new budget? G) How is her utility compared to receiving the subsidy as money instead of coupons? Explain your answer. A competitive industry consists of numerous firms producing good x. The equilibrium price in this market is 100. The short-run variable cost curve for one of these firms which is already producing in this market is given by VC = 200 Q + 500 2 and the fixed cost for this firm is 1000. A) While producing, what is the firm's output, producer surplus, and the profit? B) Should this firm continue producing in the short-run or shut down? C) If this firm's production function represents all the firms in the market, do you think the short-run market supply curve will shift in the long run?explain D) If the input prices are constant, what would be the shape of the long-run supply curve? (2 points) An individual in this market has a utility function of U(x, y) = 2xy, y being a composite good with the price of 1. E) If this person has a budget of 1500 $, how many units of x and y would she consume? Assume government provides a subsidy of 1000 in the shape of a non-transferable coupon for good x for her, F) How many x and y will she consume with her new budget? G) How is her utility compared to receiving the subsidy as money instead of coupons? Explain your answer.

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A While producing the firms output is 10000 producer surplus is 50000 and the profit is 40000 The firms output is 10000 because it is producing at the ... View the full answer