Answer to Question #182279 in Microeconomics for Christian Takyi Mensah

Question #182279

The market demand for a type of carpet has been estimated as: P = 40 -


0.25Q, where P is price (GHØ/yard) and Q is rate of sales (hundreds of yards per month). The market supply is expressed as: P = 5.0 + 0.05Q. A typical firm in this market has a total cost function given as: C = 100 - 20.0q + 2.0q2.


Determine the equilibrium market output rate and price.


Determine the output rate for a typical firm.


Determine the rate of profit (or loss) earned by the typical firm


 



1
Expert's answer
2021-04-19T18:51:42-0400

When Demand meets Supply for equilibrium Price and Quantity

Qd=Qs1604P=20P100260=24PQ_d=Q_s \\ 160-4P=20P-100 \\ 260=24P

Pe=10.83P_e=10.83 Equilibrium Price

Qe=1604×10.83=116.66Q_e=160-4 \times 10.83 =116.66 Equilibrium Quantity

For Typical Firm P=MC

10.83=4q204q=30.83q=7.7010.83=4q-20 \\ 4q=30.83 \\ q=7.70

Profit for typical firm

Profit=Revenue-Cost

=P×qC=10.83×7.70100+20×7.702(7.70)2=1883=P \times q-C \\ =10.83 \times 7.70 -100+20 \times 7.70 -2(7.70)^2=1883


Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!

Leave a comment