Anonymous
Jun 4
3. A firm operates in a perfectly competitive market. The market price of its product is 4 birr and the total cost function is given by TC 1/30-50+200+50, where TC is the total cost and Q is thelevel?
2. Given the following demand function;
Qx100-0.25Px+0.5Y-5Py, and
Qx5, Px 3 birr, Y = 20 birr and Py = 4birr
Where Qx Quantity of good X, Px Price of good Y, Y the income of the individual and Py the price of good Y. Calculate,
a. The price elasticity of demand of good X and interpret your result.
b. The income elasticity of demand of good X and interpret your result.
c. The cross price elasticity of good X for good Y and interpret your result.
Economics questions give best answer
Qx100-0.25Px+0.5Y-5Py, and
Qx5, Px 3 birr, Y = 20 birr and Py = 4birr
Where Qx Quantity of good X, Px Price of good Y, Y the income of the individual and Py the price of good Y. Calculate,
a. The price elasticity of demand of good X and interpret your result.
b. The income elasticity of demand of good X and interpret your result.
c. The cross price elasticity of good X for good Y and interpret your result.
Economics questions give best answer
2 views
2 views
2 answers
Sort By
ChatGPT
Jun 4
The total cost function is given by:
TC = 1/30Q^2 - 50Q + 200 + 50
To find the level of output where the firm maximizes profit, we need to find the level of output where marginal cost (MC) equals marginal revenue (MR). In a perfectly competitive market, the market price is equal to both marginal cost and marginal revenue.
Given that the market price is 4 birr, we can set MR = 4.
To find MC, we need to take the derivative of the total cost function with respect to Q:
MC = d(TC)/dQ = 2/30Q - 50
Now, set MC equal to MR:
2/30Q - 50 = 4
2/30Q = 54
Q = 810
Therefore, the firm should produce 810 units of output to maximize profit in a perfectly competitive market.
TC = 1/30Q^2 - 50Q + 200 + 50
To find the level of output where the firm maximizes profit, we need to find the level of output where marginal cost (MC) equals marginal revenue (MR). In a perfectly competitive market, the market price is equal to both marginal cost and marginal revenue.
Given that the market price is 4 birr, we can set MR = 4.
To find MC, we need to take the derivative of the total cost function with respect to Q:
MC = d(TC)/dQ = 2/30Q - 50
Now, set MC equal to MR:
2/30Q - 50 = 4
2/30Q = 54
Q = 810
Therefore, the firm should produce 810 units of output to maximize profit in a perfectly competitive market.
0
Google Gemini AI
Jun 4
To determine the firm's profit-maximizing output level in a perfectly competitive market, we need to compare its marginal cost (MC) to the market price.
Calculating Marginal Cost (MC):
The marginal cost is the change in total cost resulting from producing one additional unit of output. We can calculate MC by taking the derivative of the total cost function with respect to output:
```
MC = d(TC)/dQ = 1/15Q - 50
```
Profit-Maximizing Output:
In a perfectly competitive market, firms maximize profits by producing where marginal cost equals the market price:
```
MC = P
1/15Q - 50 = 4
```
Solving for Q, we get:
```
Q = 300
```
Therefore, the firm's profit-maximizing output level is 300 units.
Calculating Marginal Cost (MC):
The marginal cost is the change in total cost resulting from producing one additional unit of output. We can calculate MC by taking the derivative of the total cost function with respect to output:
```
MC = d(TC)/dQ = 1/15Q - 50
```
Profit-Maximizing Output:
In a perfectly competitive market, firms maximize profits by producing where marginal cost equals the market price:
```
MC = P
1/15Q - 50 = 4
```
Solving for Q, we get:
```
Q = 300
```
Therefore, the firm's profit-maximizing output level is 300 units.
0
