Q7 (20 marks) Suppose the market for disposable gloves is competitive and it is originally operating...
(20 marks) Suppose the market for disposable gloves is competitive and it is originally operating at the long run equilibrium. An important raw material of producing disposable gloves is natural rubber. Suppose there is a drastic increase in the price of natural rubber. With the aid of side-by-side diagrams, explain the impacts of the above change on the equilibrium price and equilibrium quantity in the market for disposable gloves, as well as the profit maximizing output level of a typical...
Suppose the apple market is competitive. a. State the long run equilibrium condition of a typical profit-maximizing firm operating in a competitive market. Express your answer using marginal cost and average cost. (2 marks) b. Assume the market for apple is now operating at her long run equilibrium. Draw side-by-side diagrams to show the long run equilibrium conditions for a typical apple farmer and the market for apples. Label your diagrams clearly. (6 marks) c. Recently, there is a fall...
Suppose the apple market is competitive. State the long run equilibrium condition of a typical profit-maximizing firm operating in a competitive market. Express your answer using marginal cost and average cost. Assume the market for apple is now operating at her long run equilibrium. Draw side-by-side diagrams to show the long run equilibrium conditions for a typical apple farmer and the market for apples. Label your diagrams clearly. Recently, there is a fall in the price of fertilizers used for...
(8 marks) Suppose the market for fresh pork is a competitive market. Initially, it is operating at its long-run competitive equilibrium at a market price of $50. Owing to the spread of COVID-19, many people turn to buying frozen meat once a week rather than fresh pork every day. As a result, the market price of fresh pork reduces to $30. With the aid of a pair of market-and-firm diagrams, illustrate how this would affect the equilibrium price and quantity...
Question Two [Total 50 marks] Suppose the market of carpets is competitive. The demand for and the supply of carpets in the market have been estimated as follows: Demand: Qd = 6500 - 100P Supply: Qs = 1200P A typical firm producing carpets has a total cost function of C = 100+ 4.C and q stand for total cost and the output level of the firm respectively. a. Find the equilibrium market price and quantity of carpets. (5 marks] b....
Suppose the market of carpets is competitive. The demand for and the supply of tables have been estimated as follows: Q = 370 – 10P Q = 80P +10 A typical firm producing tables has a total cost function of C = 64 +?2/4 a. Find the equilibrium market price and quantity. (2 marks) b. Derive MC and AC functions of a typical firm. Then find the efficient scale of output of the firm. Show your steps clearly. (5 marks)...
Q6
(9 marks) Suppose the market for cotton is competitive. A typical cotton farmer has a total cost function of: C= 100 + 159 - 6q? +q?. The prevailing market price is $15. Find the profit-maximizing output level of this farmer. Calculate the corresponding profit at this output level. Show your steps. (7 marks) Suppose all the fixed cost is unavoidable. Explain whether this farmer should shut down its production in the short run. (2 marks)
The cost curve for a typical perfect competitive firm in the coffee market is given by the following TC 128+4g+2q The market demand curve for coffee is given by the following P=84-2q (a) (i) Find the long run competitive equilibrium. That is, identify the equilibrium price and quantity, output for each firm, the number of firms in the industry and the level of producer and consumer surplus. Show your answer in a clear well-labelled diagram (ii) What is the value...
2. In a perfectly competitive market, there are initially economic profits. Firm entry causes the market supply curve to shift rightwards, but the market does not reach its long run state. a. Draw two corresponding graphs, side-by-side, that allustrate this shift. One is the market supply and demand graph, and the other is the profit-maximizing production choice of a typical firm. Using your graph, explain b. How do price and marginal revenue change as firms enter c. How do MC...
Consider a competitive market in which the market demand for the product is expressed as: P = 104 - 0.002Q, and the supply of the product is expressed as: P = 4 + 0.0005Q (make sure to count the zeros correctly). The typical firm in this market has a marginal cost of MC = 4 + 0.8q. a. Determine the equilibrium market price and output. Calculate the consumer surplus and the producer surplus at equilibrium in the industry. b. Determine...