econ_256_problem_set_5

# econ_256_problem_set_5 - long run equilibrium price(b What...

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Econ 256 Intermediate Microeconomics Professor Ranganath Murthy Bucknell University, Summer 2005 PROBLEM SET 5 Due July 1, 2005 Please use the graphs provided in class. Your graphs should be accurate . (1) The following questions refer to the graph titled “Competitive Equilibrium in the Short Run” . (a) What is the market price ? What is the marginal revenue of the firm? Draw in the demand curve facing the individual firm . (b) What is the firm’s profit-maximizing level of output ? (c) What are the firm’s total revenue , total costs , and profits ? (d) If all firms are identical, how many firms will there be in the market? (e) What is the firm’s short run supply curve ? Indicate it on the graph. (f) What will happen in the long run to the number of firms in the industry? (2) The following questions refer to the graph titled “Competitive Equilibrium in the Long Run” . (a) What is the
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Unformatted text preview: long run equilibrium price ? (b) What is the firms profit-maximizing level of output ? (c) What is the equilibrium quantity in the market/industry ? (d) If all firms are identical, how many firms will there be in the market? (3) The market demand equation is P Q d 1000 15000-= , and the market supply equation is P S 2000 = . To answer this question use the graph titled Welfare effects of a ( Specific ) Sales Tax . NOTE : I expect numerical answers for these questions. Also, indicate the deadweight loss on the graph. (a) Find the consumer surplus , the producer surplus , and the total surplus . (b) A ( specific ) sales tax of \$3 is levied on the good. Now, find the consumer surplus , the producer surplus , the governments tax revenue , and the total surplus . What is the deadweight loss due to the tax ? 1...
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## This note was uploaded on 04/14/2008 for the course ECON 256 taught by Professor ?? during the Summer '05 term at Bucknell.

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