Practice question 1 Suppose a firm has the following short run cost function: C = 20c]2 + 1280 1. Suppose price = $500. How much output does this firm supply to the market? 2. Calculate total revenue for the rm given this output level. 3. Calculate total costs, average total costs and average variable cost given this output level. 4. Calculate profits. LJ'I Calculate producer surplus (also called variable profits). Practice question 2 Suppose a firm has the following short run cost function: C = 20:?2 + 1280. 1. At what output level does the firm's SATC reach a minimum? What is SATC when output is at this level? Sketch a graph. 2. Derive an expression for the rm's short run supply function, assume fixed costs are recoverable. Suppose there are 100 identical firms (including the one above) in this market in the short run. Derive an expression for the short run market or industry supply curve. 4. Suppose market demand is given as: Q\": = 1800 2P. What is the market price and quantity transacted? How much output does each firm produce? How much profit is each firm making? Practice question 3 Suppose you have the following production function: q = LK2. The price of labour is $10 and price of capital is $20. What is the cost minimizing input bundle if the firm wishes to produce q=1000? Derive the conditional factor demands for any level of q Derive the long run cost function. Practice question 4 In a certain market in the long-run, each firm and potential entrant has a long-run average cost curve LAC = 10q2 Sq + 20 and long-run marginal cost curve MC: 301:;2 101:] + 20 .Market demand is given by Q = 39,000 2,000P. 1. In equilibrium, how many units will each firm produce? 2. What is the equilibrium price? How many firms are producing output in the long run equilibrium