ECON

I am working on this but, if I have part a and b wrong, all of the following question related will be wrong. Can you help me out?

The market for product A has the following functions:

Market demand Q=1,000-4P
Market supply Q=1/2P
Inverse market demand P=250-.25Q
Marginal Revenue MR=250-.5Q
Total Cost TC=Q(squared)
Marginal Cost MC=2Q

a) Assuming product A is produced in a perfectly competitive market, compute the market's producer and consumer surplus.

b)Assuming product A is produced in a monopolistically ompetitive market, compute the firm's short-run maximum profit or loss.

Thanks!


For a) i get P=222.2, Q=111.11. Total consumer surplus is the area of the triangle above price and below demand = .5*(250-222.2)*111.11 = 1544.4. Total producer surplus is the area of the triangle below price and above supply = .5*222.2*111.11=12344.3

For b) i get P = 225, Q=100. (you take if from here)



I don't understand how the p=222.2 is calculated. I know where it is on the graph, but how do you get it? I thought it was MR=MC but that would be 100. Can you explain it?


Ok, in the competitive market, equilibrium is when supply=demand. From your equations, 1000-4P = 1/2P.
Solve for P. (I get 222.2).

For the monopolist, set MR=MC, and as you say, Q=100. From the demand curve, when Q=100 then P=225.



Oh, Okay. Thanks!


Referring back to problem b. It looks to me like Firm A has a short run max. profit rather than a loss. Right?


Right. You can calculate total profit as TR-TC (at price P and quantity Q).

TR=P*Q, and TC=Q^2.


same same. ATC is average total cost, which is TC/Q. Substitute this in for ATC and your get profit= (P - TC/Q)Q = PQ-TC. Since P*Q is total revenue, profit = TR-TC, which makes sense; profit is total revenues less total costs.



Thanks!

  1. 👍
  2. 👎
  3. 👁
  1. the marginal cost of plat producing paper materials is represented by MC = 100 + 25Q. however, including the cost of wastes, the MSC = 100 + 50Q, where Q is the units of output. assume that in the competitive market the paper can be sold for $250.
    how much will the firm produce if it does not consider the social cost of producing the paper?
    what is the socially efficient level ot output?
    please assist.

    1. 👍
    2. 👎

Respond to this Question

First Name

Your Response

Similar Questions

  1. Statistics

    You look at the relationship between how much time people spend on the website ‘Bookface’ and how productive they are at work. time spent on Bookface is the predictor variable, and time spent working is the response variable.

  2. math

    Please help me ASAP!!! I HAVE NO IDEA HOW TO DO THIS!!!! John, Rick, and Molli can paint a room working together in 6 hours. Alone, John can paint the room in 12 hours. If Rick works alone, he can paint the room in 15 hours. Write

  3. Consumer Math

    Please help :) 1.You get a part-time job earning $8.60/hr. Tips are $3.25/hr on average. You work for 15 hours. What is your gross base pay? 2. You are paid $9.25/hr at your part-time job. You are considering working a part-time

  4. physics

    You shoot an arrow into the air. Two seconds later (2.00 s) the arrow has gone straight upward to a height of 30.0 m above its launch point part A:What was the arrow's initial speed?part B:How long did it take for the arrow to

  1. Algebra

    Mary earns $16 an hour plus $20 an hour for every hour of overtime. Overtime hours are any hours more than 30 hours for the week. Part A: Create an equation that shows the amount of money earned, M, for working x hours in a week

  2. physics

    You are given a vector in the xy plane that has a magnitude of 94.0 units and a y component of -44.0 units. A. What are the two possibilities for its component? For this part I got x = 83.1 and -83.1 B. Assuming the x component is

  3. chemistry

    Calculate the energy of a photon of electromagnetic radiation at each of the following frequencies. (A) 103.1 MHz (typical frequency for FM radio broadcasting) (B) 1015 kHz (typical frequency for AM radio broadcasting) (assume

  4. History

    What were the early effects of the Industrial Revolution on the working class? 1)Members of the working class enjoyed shorter working hours and better living conditions. 2)The working class obtained greater opportunities for

  1. Calculus - average velocity

    *VELOCITY OF A CAR* Suppose the distance s (in feet) covered by a car moving along a straight road after t sec is given by the function s = f(t) = 2t^2 + 48t. a. Calculate the average velocity of the car over the time intervals

  2. math

    A machine has four components, A, B, C, and D, set up in such a manner that all four parts must work for the machine to work properly. Assume the probability of one part working does not depend on the functionality of any of the

  3. Math

    Dominic earns $18 an hour plus $25 an hour for every hour of overtime. Overtime hours are any hours more than 35 hours for the week. Part A: Create an equation that shows the amount of money earned, E, for working x hours in a

  4. Calculus

    Consider the planes given by the equations 2y−2x−z=2 x−2y+3z=7 (a) Find a vector v parallel to the line of intersection of the planes. (b)Find the equation of a plane through the origin which is perpendicular to the line of

You can view more similar questions or ask a new question.