Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Perfect Competition: Bill grows oats. The market supply for oats is Qs = -9 +4P and demand is Qd = 40 - 3P. Bill's cost

Perfect Competition:

Bill grows oats. The market supply for oats is Qs = -9 +4P and demand is Qd = 40 - 3P. Bill's cost function is 26 + 2q + 0.1q2 , where q is his output of oats in bushels. a) (4pts) Derive the average variable cost function, the marginal cost function, and the average fixed cost function, and graph them on graph paper. b) (2 pts) What is the market price of oats? c) (2 pts) What is Bill's profit-maximizing output of oats? (Use calculus.) What are profits? Use = (P - AC)q and show in a diagram. d) (2pts) The market for oats is perfectly competitive, and thus the market price must fall to the minimum of average cost for each firm in the long run. Since it is assumed that all firms have the same cost structure, what will be the long-run price of oats? What will be Bill's profits in the long run?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business Law Today The Essentials

Authors: Roger LeRoy Miller

12th Edition

035703791X, 9780357037911

More Books

Students also viewed these Economics questions

Question

8. How can an interpreter influence the message?

Answered: 1 week ago