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# General Equilibrium

### Calculating Costs and Equilibrium for Perfect Competition

Below is a table with total data for a firm in a perfectly competitive industry. Quantity Total Cost 0 100 10 220 15 300 20 360 25 450 30 600 35 770 40 960 a. What is the marginal cost and average total cost for the firm at each level of output? b. If the prevailing market price is \$34 per unit, how many units will

### gasoline retailing industry is perfectly competitive, constant cost, and in long run equilibrium

Suppose that the gasoline retailing industry is perfectly competitive, constant cost, and in long run equilibrium. If the government unexpectedly levies a five-cent tax on every gallon sold by gasoline retailers, depict what will the effects of the tax be in the short run on industry out puts and price? Will the price rise by th

### Perfectly Competitive Market Problem

In the perfectly competitive market for orange juice concentrate the current market price is \$2.19 per gallon. a. A firm will maximize profits when its Marginal Costs per gallon are \$__ b. Favorable conditions produce a record high harvest yield. We would expect the short-term market price per gallon to ___. c. An unexp

### Monopolistic to monopoly

In 2007, the potato chip industry in the Northwest was competitively structured and in long-run competitive equilibrium; firms were earning a normal rate of return and were competing in a monopolistically competitive market structure. In 2008, two smart lawyers quietly bought up all the firms and began operations as a monopoly c

### Strategic Decision Making

The Tampa Tribune and the St. Petersburg Times compete for readers in the Tampa Bay market for newspapers. Recently, both newspapers considered changing the prices they charge for their Sunday editions. Suppose they considered the following payoff table for making a simultaneous decision to charge either a low price of \$0.50 or

### Understanding Marketing Strategies

The Tampa Tribune and the St. Petersburg Times compete for readers in the Tampa Bay market for newspapers. Recently, both newspapers considered changing the prices they charge for their Sunday editions. Suppose they considered the following payoff table for making a simultaneous decision to charge either a low price of \$0.50 or

### Game Theory and Asymmetric Information

1. a. You and a competing firm are the only sellers of a new product. You are engaged in an intense battle for initial market share. You both realize that the one who captures most of the market share will be the one who spends the most on advertising and promotion. You are the marketing manager and you have up to \$1 million fo

### Equilibrium Parameters: Price and Quantity

a. Initially, the peanut market is perfectly competitive, and each firm has minimum average cost equal to 5 (remember, MC = AC at minimum AC). Find the competitive price and quantity. b. One firm buys all of the other peanut firms, obtaining a monopoly in the peanut industry. The monopoly has constant returns to scale and

### Demand and Supply in Competitive Markets

The market for hog hats is competitive and demand is given by P=75-Q while supply is given by P=15+2Q. What are the equilibrium price and quantity in this market? Calculate the elasticity of demand at a price of 50. Give an economic interpretation to your answer. Is demand elastic, unit elastic or inelastic at this price?

### Multiplier size

Assume that the consumption schedule for a private open economy is such that consumption C= 50+0.8Y. Assume further that planned investment I g =30 and X n=10. Recall also that in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y =C+I g + X n A) Calculate the equilibrium level of income or real

### A firm in a purely competitive industry is currently producing 1000 units per day at a total cost of \$450. If the firm produce 800 units per day its total cost would be \$300, and if it produced 500 units per day, its total cost would \$275. What are the firms ATC per unit at these three levels of production? If every firm in this industry has the same cost structure, is the industry in long-run competitive equilibrium? From what you know about these firms' cost structures, what is the highest possible price per unit that could exist as the market price in long-run equilibrium? If that price ends up being the market price and if the normal rate of profit is 10 percent, then how big will each firm's accounting profit per unit be?

A firm in a purely competitive industry is currently producing 1000 units per day at a total cost of \$450. If the firm produce 800 units per day its total cost would be \$300, and if it produced 500 units per day, its total cost would \$275. What are the firms ATC per unit at these three levels of production? If every firm in this

### Solving for Optimal Combination of Inputs

The Largo Publishing House uses 400 printers and 200 printing presses to produce books. A printer's wage rate is \$20, and the price of a printing press is \$5,000. The last printer added 20 books to total output, while the last press added 1,000 books to total output. Is the publishing house making the optimal input choice? Why o

### Describe a situation where prices have been held out of equilibrium due to government intervention in the market-the obvious ones discussed in the text are rent control and agricultural subsidies. You may use a specific example of one of these, or any other example. b. Were there any unintended consequences in your example?

a. Describe a situation where prices have been held out of equilibrium due to government intervention in the market-the obvious ones discussed in the text are rent control and agricultural subsidies. You may use a specific example of one of these, or any other example. b. Were there any unintended consequences in your examp

Assume that the consumption of schedule for a private open economy is such that consumption C = 50 + 0.8Y. Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig = 30 and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate

### Equilibrium Level of Income or GDP

Assume that the consumption schedule for a private open economy is such that consumption C=50+0.8Y. Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig=30 and Xn=10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditu

### Understanding Equilibrium

Assume that the consumption schedule for a private open economy is such that consumption C = 50 + 0.8Y. Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig = 30 and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate ex

### ATC

A firm in a purely competitive industry is currently producing 1000 units per day at a total cost of \$450. If the firm produced 800 units per day , its total cost would be \$300, and if it produced 500 units per day,its total cost would be \$275. What are the firms average total cost per unit a these levels of productions? If ever

### ATC is examined.

A firm in a purely competitive industry is currently producing 1000 units per day at a total cost of \$450. If the firm produced 800 units per day, its total cost would be \$300, and if it produced 500 units per day, its total cost would be \$275. What are the firm's ATC per unit at these three levels of production? If every firm

### Average Total Cost

A firm in a purely competitive industry is currently producing 1000 units per day at a total cost of \$450. If the firm produced 800 units per day, its total cost would be \$300, and if it produced 500 units per day, its total cost would be \$275. What are the firm's ATC per unit at these three levels of production? If every firm i

### Oligopoly and payoff table

Two oligopoly firms are in the process of evaluating their marketing strategies. Firm 1 can generate estimated profits of \$10 million from strategy A if the second firm reacts by strategy C, and \$15 million from strategy A if the second firm reacts with strategy D. On the other hand, Firm 1 may follow strategy B which could retu

### ATC

A firm in purely competitive industry is currently producing 1200 units per day at a total cost of \$600. If the firm produced 1000 units per day, its total cost would be \$400, and if it produced 700 unit per day, its total cost would be \$375. What is the firm's ATC per unit at these three levels of production? If every firm in t

### Calculating a competitive industry's long-run equilibrium

A firm in a purely competitive industry is currently producing 1200 units per day at a total cost of \$600 . If the firm purchased 1000 units per day, its total cost would be \$400, and if it produced 700 units per day, its total cost would be \$375. What is the firms ATC per unit at these three levels of production? If every firm

### National income and expenditure components

The national income and expenditure components for each level of the economy of Lala Land are given below. What is the total expenditure at each level of income? What is the equilibrium level of GDP? What is the marginal propensity to consume? Using the multiplier, if consumer spending autonomously increases by \$200,

### Calculate Demand-Side Equilibrium

DEMAND SIDE EQUILIBRIUM ACTIVITY 1. From the following data, find the marginal propensity to consume, compute the expenditure at each level of GDP, and find the equilibrium GDP: GDP C I G X IM 5,000 3,650 1,000 1,200 700 1,100 5,500 4,000 1,000 1,200 700 1,100 6,000 4,350 1,000 1,200 700

### Management decisions for a perfectly competitive firm

1. Should a perfectly competitive firm making a loss in the short-run always leave the market? Why or why not? What about in the long-run? 2. Should a perfectly competitive firm advertise in an effort to increase its sales and its profits? Why or why not? 3. Can you think of an example of a perfectly competitive firm? Wh

### third-party-payer system on equilibrium price and quantity

Explain the effect of a third-party-payer system on equilibrium price and quantity. I have a neighbor who had bi-pass surgery that cost us all \$150,000 and he was 90 years old. This is a 3rd party example where he only has a few years left but was not able to pay to have the surgery done but we taxpayers paid it. Explain if this