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Unformatted text preview: Econ 1 Winter 2008 Dr. Narag 1 Homework 5
(1) You are hired as a consultant to a firm in a perfectly competitive market that sells tennis
racquets at a market price of $35. The firm's cost schedule is as follows: Fill in the table above. What is the firm's profit maximizing level of output? (2) Firm ABC is a price taker. It has the following hourly costs: Output (Q per hour) 0 1 2 3 4 5 6 a) Total Cost (dollars per hour) $10 21 30 41 54 69 86 If Q sells for $15, what is ABC's profit-maximizing output per hour? What is his profit? Your answer must include graphical as well as numerical solutions. You must show the total and marginal graphical solutions. If Q sold for $11 instead of $15, what quantity of Q would ABC offer for sale? Explain thoroughly with graphical as well as numerical solutions. b) Econ 1 Winter 2008 Dr. Narag
c) d) e) What is ABC's supply curve? Explain and show this graphically. 2 What price will cause ABC to leave this industry? What price will cause other firms with costs identical to ABC to enter the industry? What is the long-run equilibrium price of Q? Explain graphically and verbally. ...
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This homework help was uploaded on 04/16/2008 for the course ECON 1 taught by Professor Nagata during the Winter '08 term at UCLA.
- Winter '08