Question

produce 16000 units of output. What is the cost minimizing combination of capital and labor for this firm? What is it's minimized cost of producing 16000 units of output? 2.2 Problem 2 In a perfectly competitive market all firms (including potential entrants) have a total cost function given by TC(Q) = 100Q - QP + ', where Q is that firm's output. Therefore, each firm's average cost function is AC(Q) = 100-Q+ Qand each firm's marginal cost function is given by MCQ) = 100 - 20+ . Demand in the market is given by D(P) = 1190 - 2P, were P is the price of the good traded in this market. Find the long run perfectly competitive equilibrium in the market, including the quantity supplied by each firm, the market price and the number of ac- tive firms. 2.3 Problem 3 A monopolist operates in a market with inverse demand P = 20 - 20, so that marginal revenue is MR = 20 - 4Q. The monopolist's marginal costs are MC = 5+Q. Find the profit maximizing quantity of output and price for this monopolist.

Answer 1

Due to presence of HOMEWORKLIB POLICY, I am answering one question.

Problem 3.

Ans: Profit is given as:

Profit = TR - TC

To maximize profit, we have:

$\frac{dProfit}{dQ}=\frac{dTR}{dQ}-\frac{dTC}{dQ}=MR-MC=0$

gives: MR = MC

$20-4Q=5+Q$

15 = 5Q

Q = 3

Using demand curve:

P = 20 - 2Q = 20 - 2(3) = 20 - 6 = 14

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