Assume the demand for beef is given by



Qd = 22 + 0.1 Y – 10Pb + 5 Pc



And the supply of beef is given by:



Qs = -400 + 500Pb – 200 Pf



where Qd denotes quantity of beef demanded, Qs denotes quantity supplied, Pb denotes price, of beef, Y denotes per capita income, Pc denotes the price of chicken, and Pf denotes the price of feed used for growing beef.

Assume further that:

Y = $10,000

Pc = $2.00

Pf = $1.00

a. What is the equilibrium price and quantity of beef?

b. What is the point price elasticity of demand for beef when its price is equal to $4.00, using the demand curve you derived to answer (a) above.

c. If the price of chicken increases to $3.00, what happens to the demand curve for beef? What is the equilibrium price and quantity of beef?

d. Compute the cross elasticity of demand and indicate whether beef and chicken are substitutes or complements.



3. Company X produces widgets. If it produces 50 widgets per day, its average variable cost is $600 per widget, its average total cost is $1000 per widget, and its marginal cost is $700 per widget. Based on the above information:



Determine average fixed costs when the firm produces 50 widgets per day.
Determine average total and variable costs for producing 49 widgets.
Determine whether the average variable and average total cost curves are rising or falling between production of 49 and 50 widgets per day.
If the price per widget is $800, will the firm decide to maintain production at its current rate, increase it, decrease it, or shut down in the short run? Explain your answer.


4. Answer each of the questions below. Provide a brief explanation to support your answer.

a. Which type of firm faces the most elastic demand curve?

b. In which of market structures are firms able to earn both accounting and economic profits in the long run?

c. Why are firms in (perfectly) competitive markets assumed to be more efficient than firms in other market structures?

d. In what market structure is the firm’s demand curve the same as the industry demand curve?

e. Why do monopolistically competitive firms end up with zero economic profit in the long run even if price is above marginal cost?

1a) this is just algebra. Plug in the known values for Y, Pc, and Pf. Then set Qd=Qs and solve for Pb

1b) Raise price by 1%, calculate the %change in Q. Elasticity is %changeQ/%changeP

1c) demand curve shifts out.

1d) raise price of chicken by 1%, then calculate the %change in Q.

3) again, more algebra.
Total costs (TC) are 50*1000, total variable costs (TVC) are 50*600. The differnence between the two is total fixed costs.
3b) MC=700
3c) recalculate TC and TVC
3d) MC=700,MR=800 -- increase production.

4) take a shot, what do you think?

could you be more specific

plagerism could get you expelled! Sara, if that is your real name!

1. To find the equilibrium price and quantity of beef, we need to set the quantity demanded equal to the quantity supplied and solve for Pb.

Equating Qd and Qs:
22 + 0.1Y - 10Pb + 5Pc = -400 + 500Pb - 200Pf

Given:
Y = $10,000
Pc = $2.00
Pf = $1.00

Substituting the given values:
22 + 0.1(10,000) - 10Pb + 5(2) = -400 + 500Pb - 200(1)

Simplifying the equation:
22 + 1,000 - 10Pb + 10 = -400 + 500Pb - 200
1,032 - 10Pb = 300 + 500Pb
1,332 = 510Pb
Pb = 1,332 / 510
Pb = $2.61 (approximately)

Substituting the equilibrium price in either the demand or supply equation to find the equilibrium quantity:
Qd = 22 + 0.1(10,000) - 10(2.61) + 5(2)
Qd = 22 + 1,000 - 26.1 + 10
Qd = 1,006.9 (approximately)

Therefore, the equilibrium price of beef is approximately $2.61 per unit, and the equilibrium quantity of beef is approximately 1,006.9 units.

2. To find the point price elasticity of demand for beef when its price is equal to $4.00, we need to calculate the percentage change in quantity demanded divided by the percentage change in price.

Given:
Price of beef (Pb) = $4.00
Demand equation: Qd = 22 + 0.1(10,000) - 10Pb + 5(2)

Calculating the quantity demanded at Pb = $4.00:
Qd = 22 + 1,000 - 10(4) + 10
Qd = 1,008

Now, calculating the quantity demanded at Pb = $3.60:
Qd2 = 22 + 1,000 - 10(3.6) + 10
Qd2 = 1,012

Calculating the percentage change in quantity demanded:
% Change in quantity demanded = (Qd2 - Qd) / Qd
% Change in quantity demanded = (1,012 - 1,008) / 1,008
% Change in quantity demanded = 0.00397 or 0.397% (approximately)

Calculating the percentage change in price:
% Change in price = (4 - 3.6) / 3.6
% Change in price = 0.1111 or 11.11%

Calculating the point price elasticity of demand:
Price elasticity of demand = % Change in quantity demanded / % Change in price
Price elasticity of demand = 0.00397 / 0.1111
Price elasticity of demand = 0.0357 (approximately)

Therefore, the point price elasticity of demand for beef when its price is equal to $4.00 is approximately 0.0357.

3. a. Average fixed costs are calculated by dividing total fixed costs by the quantity produced. In this case, when the firm produces 50 widgets per day, the average variable cost is given as $600 per widget. Therefore, average fixed costs would be:
Average fixed costs = Average total costs - Average variable costs
Average fixed costs = $1,000 - $600
Average fixed costs = $400 per widget

b. To determine the average total and variable costs for producing 49 widgets, we need more information. Given the information provided, the average total and variable costs cannot be determined specifically for producing 49 widgets.

c. The rising or falling nature of the average variable and average total cost curves between the production of 49 and 50 widgets per day cannot be determined without more information.

d. To determine whether the firm will maintain production at its current rate, increase it, decrease it, or shut down in the short run, we need to compare the firm's price per widget with its average variable cost. If the price per widget is greater than the average variable cost, the firm will continue production in the short run. However, if the price per widget is less than the average variable cost, the firm may shut down to minimize losses.