This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Industry demand is given by: QD = 1000 P All firms in the industry have identical and constant ... (Read 48 times)

CORALGRILL2014

  • Hero Member
  • *****
  • Posts: 525
on: Jul 1, 2018
Industry demand is given by: QD = 1000  P
 
  All firms in the industry have identical and constant marginal and average costs of 50/unit.
 
  a. If the industry is perfectly competitive, what will industry output be? What will be the equilibrium price? What profit will each firm earn?
  b. Now suppose that there are five firms in the industry, and that they collude to set price. What price will they set? What will be the output of each firm? What will be the profit of each firm?

Question 2

In the presence of a negative externality, a specific tax can achieve the social optimum because
 
  A) output is reduced to zero as a result.
  B) it internalizes the external cost.
  C) it directly charges the producer for polluting.
  D) the price of the good rises by the full amount of the tax.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

randomguy133

  • Sr. Member
  • ****
  • Posts: 310
Reply #1 on: Jul 1, 2018
Answer to Question 1

a. P = 50, so Q = 950. Each firm earns an economic profit of zero.
b. MR = 1000 - 2Q. Set MR = MC
50 = 1000 - 2Q
Q = 475
P = 525
Each firm produces 1/5 the output, or q = 95. Profit for each firm is 45,125.

Answer to Question 2

B


CORALGRILL2014

  • Member
  • Posts: 525
Reply 2 on: Jul 1, 2018
Thanks for the timely response, appreciate it

tandmlomax84

  • Member
  • Posts: 323
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

Although the Roman numeral for the number 4 has always been taught to have been "IV," according to historians, the ancient Romans probably used "IIII" most of the time. This is partially backed up by the fact that early grandfather clocks displayed IIII for the number 4 instead of IV. Early clockmakers apparently thought that the IIII balanced out the VIII (used for the number 8) on the clock face and that it just looked better.

Did you know?

Blood in the urine can be a sign of a kidney stone, glomerulonephritis, or other kidney problems.

Did you know?

Once thought to have neurofibromatosis, Joseph Merrick (also known as "the elephant man") is now, in retrospect, thought by clinical experts to have had Proteus syndrome. This endocrine disease causes continued and abnormal growth of the bones, muscles, skin, and so on and can become completely debilitating with severe deformities occurring anywhere on the body.

Did you know?

Warfarin was developed as a consequence of the study of a strange bleeding disorder that suddenly occurred in cattle on the northern prairies of the United States in the early 1900s.

Did you know?

Patients who cannot swallow may receive nutrition via a parenteral route—usually, a catheter is inserted through the chest into a large vein going into the heart.

An Oil-dependent World— Supply and Demand Driven An Oil-dependent World— Supply and Demand Driven
Reaction at constant-volume Reaction at constant-volume
China has relied on cheap coal to meet its demand for energy China has relied on cheap coal to meet its demand for energy
A ship is being pulled through a harbor at constant velocity by two tugboats as shown in the ... A ship is being pulled through a harbor at constant velocity by two tugboats as shown in the ...
Write equilibrium constant expressions for the following reactions in terms of concentration: Write equilibrium constant expressions for the following reactions in terms of concentration:
The charge for telephone calls T is partly constant and partly varies with the number N of ... The charge for telephone calls T is partly constant and partly varies with the number N of ...
Video: Types of energy transfer reactions: oxidation-reduction reactions and ATP generation reactions

For a complete list of videos, visit our video library