AnswerTu09
.pdf
School
University of Technology Sydney**We aren't endorsed by this school
Course
BUSINESS 23567
Subject
Economics
Date
Dec 19, 2024
Pages
7
Uploaded by DoctorGerbilPerson99
inofQ1.(a).·MarketDemand:Mark'sDemandJohn'sDemandMarket'sDemandPxPaP-10-"yJo---j-j--.."wSh↓x510-2 p=x10-p=x9X=&john=10-Pifp=5X=<john+Kark=20-3Pifp<5·MarketSupply:X=(n+xp=(5+p)+(5+2p)=10+34X=10+SpP-10.ix510InEgm:20 -3p=10+3p=6p=1=4*=**=20-3x=15
(b).·Needtofindtheprofitoffirmsbaseonp=p+=Y·Butwedon'tknowthelong-runcostsoftwofirms,(likethecostsofcapitalandLabor).Therefore,wecannotanswerthisquestion.Q2.(a).Thetotaltradedis1000Andeachfirmproduces10unitsnumberoffirms=100%Im(b)·Amarketisinalong-runequifthereisnoentryorexitoffirms.Foreachfirm,P=10istheirbreak-evenpriceinlongrun.ItmeansthattheirprofitiswhenP=10
·sonofirmentryorexit.Yes(c)
(d)(i)↓t~Ac4 --------0TheintroductionoftheLicensefeeimpliesanincreaseinthelong-runcosts.:CRACcurveshiftsupward(ACR->AC?)②Inshortrun,thisfeeiskindlikeafixedcost,SoAVCSRdoesn'tchange.③TheLicensefeeisfixed,sotheMCoffirmsdoesn'tchangeinneitherLRnorSR.=>ThesupplycurveinLRandSRstoysame.④SinceACRincrease,theexitpriceincreaseaswell.whenP=10,firmshavenegativeprofit.=>firmsstartexitingthemarket=InumberoffirmslinSR+:S"inpanelashifttoSMNewprice
⑤Thisnewpriceisnewbreak-evenpriceandnewsupplycurveinpanelC.(ii)Thenumberoffirms↓.Theegutotalquantityinthismarket↓(inpanelasandcl,buttheproducingquantitybyeachfirm↑(inpanelbl.Thenumberoffirms↓.n=totalmattyindividualquantity·>
Q 3.(a)Findtheextprice,andcomparingwiththecurrentprice.·Mc=Al=Y*E"AC(x*)=P↑Ac=x=c-5x+xAl=Mc=)10-5X+x=10-10x+3x2x-5x=0X.(2X-5)oX=0,orX=Y-PEAL(x=+(2)=10-5.+15)=10-4+=j4&P=20>=PBE↑·Profitispositive,thenmorefirmswillentry.Supply&=PLtoPBE=B.
(b)PAsin>(C)Demand:X=20-44&supply:p=4=>X*=20-4x=5Egm:PA&