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The market determined price in a perfectly competitive industry is P = Rs. 10. Suppose that the total cost equation of an individual firm in the industry is given by the expression
TC 1000+2Q+0.01Q2
a) What is the firm’s profit-maximizing output level and profit? Is this profit normal profit or supper normal profit? Justify your answer (10 marks)
b) At profit maximizing level what is firm total cost, total revenue and marginal cost (10 Marks)
c) Why does a competitive firm is considered as a price taker and Monopoly firm as a price maker (05 Marks)
You are a member of Board who chairs an ad committee of reforming taxes on telecommunication services. The local telecom tax es can amount to as much as 25 percent of a consumer’s phone bill. The high rates on telecom services have become quite controversial, due to the fact that the deregulation of the telecom industry has led to a highly competitive market. Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Q=250-5P and the market supply (including taxes) is Q=4P+110 (both in million). The Board of management is considering tax reform that would dramatically cut tax rates, leading to the supply function under the new tax policy of Q=4.171P+110. How much money would typical consumer save each month as a result of proposed legislation?
1. If a firm in a perfectly competitive industry raises its price above the market price.......
2.A monopoly is.....
Suppose a consumer consuming two commodities X and Y has the following utility function U= X0.4Y0.6. If price of good X and Y are 2 and 3 respectively and income constraint is Birr 50, then find
Find quantities of X and Y which maximize utility
Show how the rise in income to Birr 100 will affect the quantities of X and Y
Suppose that the price of good A and Good B are birr 3and birr 2 respectively suppose aconsumer is spending his entire income for buying 4 units of A and 6 unit of B,and the marignal utility of both 4th unit of A and 6th unit of B is 6, is the consumer at his optimal position?
A. they should leave the output unchanged.
B. they should increse production.
C. they should decrease production.
D. they should shut down.
A. each participant is too small to affect the market price.
B. the price can be driven upward by suppliers holding back on goods and services.
C. government intervention is needed to ensure that price are fair for consumers.
D. there can be few or many buyers and sellers.
. Draw a production possibility frontier showing the trade-off between the production of apples and the production of oranges
suppose that the utility function of a consumer is given by TU(x,y)=3x2 y and the price of x and y are $1 and $2 per unit, respectively. if the income of the consumer is $600 and if he spends all of his income on the consumption of commodities of x and y, find the optimum amount of x and y that the consumer will consume at equilibrium and find MRTSx,y.
#340153 on Dec 2023