Exam 8: Supply in a Competitive Market

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Suppose the market for sprouts is in long-run equilibrium. In the short run, what will happen if an E. coli outbreak reduces the demand for sprouts?

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Complete the following table and identify the quantity that maximizes profit. Complete the following table and identify the quantity that maximizes profit.

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Answer the following questions. Answer the following questions.

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Suppose the long-run equilibrium price in a perfectly competitive market is $100. When demand increases, if it is a(n) _____ industry, the long-run equilibrium price will _____ to reflect a _____ long-run average total cost.

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Use the following to answer question: Figure 8.10 Use the following to answer question: Figure 8.10   -(Figure 8.10) Economic profit for this firm can be calculated as: -(Figure 8.10) Economic profit for this firm can be calculated as:

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Suppose that the market for chocolate milk is perfectly competitive. Companies that produce chocolate milk are identical and have long-run cost functions given by Suppose that the market for chocolate milk is perfectly competitive. Companies that produce chocolate milk are identical and have long-run cost functions given by   . a. Derive the marginal and average cost curves for a firm in this industry. b. Find the quantity at which average total cost is minimized for each firm. . a. Derive the marginal and average cost curves for a firm in this industry. b. Find the quantity at which average total cost is minimized for each firm.

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Suppose that the identical firms in a perfectly competitive market for cakes have long-run total cost functions given by TC(Q) = 2Q3 - 6Q2 + 10Q. Total cost is independent of the number of firms and total output in the market. a. Describe the long-run supply curve for this industry. b. Suppose market demand is Suppose that the identical firms in a perfectly competitive market for cakes have long-run total cost functions given by TC(Q) = 2Q<sup>3</sup> -<sup> </sup>6Q<sup>2 </sup>+ 10Q. Total cost is independent of the number of firms and total output in the market. a. Describe the long-run supply curve for this industry. b. Suppose market demand is   = 2,500 - 30P. Solve for the long-run competitive equilibrium price, output per firm, and number of firms in the market. = 2,500 - 30P. Solve for the long-run competitive equilibrium price, output per firm, and number of firms in the market.

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Use the following to answer question: Figure 8.2 Use the following to answer question: Figure 8.2   -(Figure 8.2) The total revenue curve for a perfectly competitive firm is represented by curve: -(Figure 8.2) The total revenue curve for a perfectly competitive firm is represented by curve:

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Suppose that the market for ice cream sandwiches is perfectly competitive. Firms that produce ice cream sandwiches are identical; they have long-run cost functions given by Suppose that the market for ice cream sandwiches is perfectly competitive. Firms that produce ice cream sandwiches are identical; they have long-run cost functions given by   . a. Derive the marginal and average total cost curves in this industry. (Hint: Use calculus to find marginal cost.) b. Find the quantity at which average total cost is minimized. . a. Derive the marginal and average total cost curves in this industry. (Hint: Use calculus to find marginal cost.) b. Find the quantity at which average total cost is minimized.

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Suppose that the long-run total cost curve for each firm is given by TC = 1,000 + 100Q - 10Q2 + Q3. Also suppose there is free entry and exit. To find the quantity where ATC is minimized, solve the following equation for Q:

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Which of the following statements is (are) TRUE? Which of the following statements is (are) TRUE?

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With which of the following scenarios should a perfectly competitive firm shut down in the short run? With which of the following scenarios should a perfectly competitive firm shut down in the short run?

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In a perfectly competitive market with 2,000 firms, output is zero at prices less than $10. At prices of $10 to $19.99, each firm will produce 100 units of output. At any price of $20 or more, each firm will produce 300 units of output. As this industry expands output, however, prices of the key inputs to production increase substantially. The total industry output at a market price of $33 is:

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Suppose that the perfectly competitive market for granola bars is made up of identical firms with long-run total cost functions given by TC(Q) = 8Q3- Suppose that the perfectly competitive market for granola bars is made up of identical firms with long-run total cost functions given by TC(Q) = 8Q<sup>3</sup>-   Q<sup>2</sup> + 200Q. Assume that these cost functions are independent of the number of firms in the market and that firms may enter or exit the market freely. Market demand is   , where price is in cents. a. Using calculus, find the long-run equilibrium price, the quantity produced by each firm, and the number of firms in the industry. b. Suppose that market demand decreases to   . Solve for the new long-run competitive equilibrium. Q2 + 200Q. Assume that these cost functions are independent of the number of firms in the market and that firms may enter or exit the market freely. Market demand is Suppose that the perfectly competitive market for granola bars is made up of identical firms with long-run total cost functions given by TC(Q) = 8Q<sup>3</sup>-   Q<sup>2</sup> + 200Q. Assume that these cost functions are independent of the number of firms in the market and that firms may enter or exit the market freely. Market demand is   , where price is in cents. a. Using calculus, find the long-run equilibrium price, the quantity produced by each firm, and the number of firms in the industry. b. Suppose that market demand decreases to   . Solve for the new long-run competitive equilibrium. , where price is in cents. a. Using calculus, find the long-run equilibrium price, the quantity produced by each firm, and the number of firms in the industry. b. Suppose that market demand decreases to Suppose that the perfectly competitive market for granola bars is made up of identical firms with long-run total cost functions given by TC(Q) = 8Q<sup>3</sup>-   Q<sup>2</sup> + 200Q. Assume that these cost functions are independent of the number of firms in the market and that firms may enter or exit the market freely. Market demand is   , where price is in cents. a. Using calculus, find the long-run equilibrium price, the quantity produced by each firm, and the number of firms in the industry. b. Suppose that market demand decreases to   . Solve for the new long-run competitive equilibrium. . Solve for the new long-run competitive equilibrium.

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Use the following to answer question: Figure 8.25 Use the following to answer question: Figure 8.25   -(Figure 8.25) Answer the following questions.  -(Figure 8.25) Answer the following questions. Use the following to answer question: Figure 8.25   -(Figure 8.25) Answer the following questions.

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Use the following to answer question: Figure 8.9 Use the following to answer question: Figure 8.9   -(Figure 8.9) At the profit-maximizing output level, this firm earns profit of: -(Figure 8.9) At the profit-maximizing output level, this firm earns profit of:

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Use the following to answer question: Figure 8.3 Use the following to answer question: Figure 8.3   -(Figure 8.3) The graph depicts the perfectly competitive market for walnuts. Which of the following statements is (are) TRUE?  -(Figure 8.3) The graph depicts the perfectly competitive market for walnuts. Which of the following statements is (are) TRUE? Use the following to answer question: Figure 8.3   -(Figure 8.3) The graph depicts the perfectly competitive market for walnuts. Which of the following statements is (are) TRUE?

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To maximize profits, a firm should produce where:

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A perfectly competitive industry consists of 500 identical firms, each with a short-run supply curve given by Qs = -20 + 15P. What is the equation for the industry's short-run supply curve?

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Suppose that the perfectly competitive market for coffee beans is made up of identical firms with long-run total cost functions given by TC = 2Q3 - 24Q2 + 80Q, where Q is 100,000 pounds of coffee beans. Assume that these cost functions are independent of the number of firms in the market and that firms may enter or exit the market freely. Market demand is Suppose that the perfectly competitive market for coffee beans is made up of identical firms with long-run total cost functions given by TC = 2Q<sup>3 </sup>- 24Q<sup>2</sup> + 80Q, where Q is 100,000 pounds of coffee beans. Assume that these cost functions are independent of the number of firms in the market and that firms may enter or exit the market freely. Market demand is   . a. Find the long-run equilibrium price, the quantity produced by each firm, and the number of firms in the industry. b. Suppose that market demand increases to   . Solve for the new long-run competitive equilibrium and the number of firms in the industry under the new market demand condition. . a. Find the long-run equilibrium price, the quantity produced by each firm, and the number of firms in the industry. b. Suppose that market demand increases to Suppose that the perfectly competitive market for coffee beans is made up of identical firms with long-run total cost functions given by TC = 2Q<sup>3 </sup>- 24Q<sup>2</sup> + 80Q, where Q is 100,000 pounds of coffee beans. Assume that these cost functions are independent of the number of firms in the market and that firms may enter or exit the market freely. Market demand is   . a. Find the long-run equilibrium price, the quantity produced by each firm, and the number of firms in the industry. b. Suppose that market demand increases to   . Solve for the new long-run competitive equilibrium and the number of firms in the industry under the new market demand condition. . Solve for the new long-run competitive equilibrium and the number of firms in the industry under the new market demand condition.

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