Let\'s say we have a perfectly competitive industry in which the demand curve is
ID: 1094210 • Letter: L
Question
Let's say we have a perfectly competitive industry in which the demand curve is described by the equation P = 100-2Q. The cost curve for all firms is C = 24 - 12q + 6q2 Solve for the marginal cost. Solve for the average total cost. What will marginal revenue be in this case? Note that you will not get a numeric answer or equation at this point, only an identity. Let's say that there are positive economic profits in the short run. What will firms outside the industry want to do? What about negative profits? Let's say we have two firms with supply curves given as q = 6P. What is the industry supply in this case? What will economic profits be in the long run to elicit no exit or entry? Draw average total costs, marginal costs and price for a profit maximizing firm in this perfectly competitive industry with zero profits. Note that you should simply assume U-shaped marginal costs rather than using the costs from this problem. Will this graph look any different for a single firm if the demand in the industry doubles? What is the equation defining profit? Divide this equation by quantity on both sides. You should be able to describe profit as quantity times the right side of this equation. If pro fits are zero: what does price have to equal? What two values does a firm set equal to each other to maximize profits? In the long run equilibrium in the perfectly competitive case, profits are zero. Using your answers from c., h. and g., what is the long run equilibrium relationship between price, marginal cost: marginal revenue and average total cost? Why does this relationship hold? Put it all together. For a single firm, what will quantity produced be? What will the price be? How many firms will there be in the industry?Explanation / Answer
Suppose that the annual rate of inflation for the next 5 years will remain at about 3%. If a loaf of bread costs $2.25 today, about how much would you expect a similar loaf to cost 5 years from today?
The price today is P = $2.25, and the rate of inflation is R = 3% = .03. Each year the price is multiplied by 1.03, so after N = 5 years the bread should cost about
There are different approaches to the subject. One approach is descriptive in providing an overview of industrial organization, such as measures of competition and the size-concentration of firms in an industry. A second approach uses microeconomic models to explain internal firm organization and market strategy, which includes internal research and development along with issues of internal reorganization and renewal.[4] A third aspect is oriented to public policy as to economic regulation,[5] antitrust law,[6] and, more generally, the economic governance of law in defining property rights, enforcing contracts, and providing organizational infrastructure.[7][8]
The subject has a theoretical side and a practical side. According to one textbook: "On one plane the field is abstract, a set of analytical concepts about competition and monopoly. On a second plane the topic is about real markets, teeming with the excitement and drama of struggles among real firms
(a) Under annual compounding your interest is not compounded during the year, but only at the end of the year. Thus, after one year, your money has grown by 10.5%, the same as the annual interest rate. The annual yield is 10.5%, the annual interest rate.
(b) If you invest a principal P = $100 at 10% interest, compounded semiannually, then there are n = 2 compoundings in the first year, and the annual interest rate is r = 10% =.10. After one year the time is t = 1, and your investment will have grown to the amount
A = P
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