Q AC MC

1 4 12
2 8 20
3 12 28
4 16 36
5 20 44
6 24 52
7 28 60
8 32 68
9 36 76

suppose that there are 70 firms in operating in the industry. using the MC curve, find out how much output in total is delivered to the market at each price (you only need to consider prices equal to the MC values above). now assume that the market demand curve is given by p = 305 - .5Q, where p is the market price. for purposes of this problem, it is helpful to "invert" the demand curve, writing Q in terms of p. this gives Q = 610 - 2p.

a) when p = 44 the market has a) excess supply or b) excess demand equal to ? units
when p = 68, the market has a) excess supply or b) excess demand equal to ? units.

b) find the market equilibrium price, and compute output per firm and profit per firm at this price (you need only check prices corresponding to the above MC values). the equilibrium price is p = ?, output per firm is Q = ?, and profit per firm equals ?.

c) suppose that producers feel that they are not earning enough profit and, as a result, they lobby the government to institute a "price support program." they convince the government that a "fair" price for widgets is $76. to guarantee that this price is realized, the government has to go into the market and buy output, which it then puts in a warehouse for indefinite storage. the government must buy ? units of output to reach its price target. the price support program raises profit per firm to ?.

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To answer these questions, we need to analyze the market demand and supply curves and find the equilibrium price and quantity. Then, we can calculate the excess supply or demand at specific prices and determine the output per firm and profit per firm.

Step 1: Analyze the demand and supply curves:
The market demand curve is given as: Q = 610 - 2p
The market supply curve is represented by the MC (marginal cost) values provided in the table.

Step 2: Find the equilibrium price and quantity:
To find the equilibrium price, we need to set the quantity demanded equal to the quantity supplied. Setting Qd = Qs, we get:
610 - 2p = MC
Now, substitute the values of MC from the table to find the corresponding equilibrium prices.

Step 3: Calculate the excess supply or demand:
For each equilibrium price, compare it with the given MC values to determine if there is excess supply or demand.

Step 4: Calculate the output per firm and profit per firm at the equilibrium price:
Once we find the equilibrium price, we can substitute it into the market demand curve to find the equilibrium quantity. Divide this quantity by the number of firms (70 in this case) to find the output per firm.
To calculate profit per firm, we need to find the total revenue per firm (which is the equilibrium price multiplied by the output per firm) and subtract the total cost per firm (which is the MC value multiplied by the output per firm).

Step 5: Determine the impact of the price support program:
If the government sets a fixed price of $76, it will create excess supply in the market. Calculate the quantity that the government needs to buy to reach this price target. The excess supply is equal to the quantity bought by the government.
To calculate the profit per firm under the price support program, subtract the MC value from the price support of $76 and multiply it by the output per firm.

By following these steps, you should be able to answer all the questions posed in the problem.