Unformatted text preview: Economics 110-‐02: Intro to Economic Theory Wesleyan University Fall 2013 Professor Damien Sheehan-‐Connor Problem Set 5 1.
4. Textbook Problem, Chapter 12, Problem 4 Textbook Problem, Chapter 12, Problem 5 Textbook Problem, Chapter 12, Problem 6 Suppose that a firm has the cost function = 100 + ! . The firm is in a perfectly competitive industry facing a price of 50. a. Write the firm’s profit function, (). b. Solve the firm’s profit maximization problem to find the optimal quantity of output. c. What will the firm’s profits be at this quantity? d. Do you think the market this firm sells in is in long run equilibrium? Explain. e. If the market is not in long run equilibrium, what do you think the price will be when the market reaches long term equilibrium? ...
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- Fall '08