sample midterm 2 - produce in the short run If your answers...

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Here are some additional questions from the book that I suggest doing to study for Midterm 2. In addition, I would recommend going over the problem sets, the extra credits and also examples we did in class. (To be most effective, DO the problems first, then look at the solutions.) Chapter 6 Questions 2, 7 and 9 Chapter 7 Question 2, 4 Chapter 8 Question 4. Except change the table to the following: Q TVC 0 0 1 5 2 10 3 20 4 36 5 54 6 74 Additional question for part 4: Suppose total fixed cost falls to $50. How much will the firm produce in the short run? Suppose the TFC returns to $100 but now a per unit subsidy of $4 is provided (this is just a negative tax, the government pays the firm $4 for each unit produced). How much will the firm
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Unformatted text preview: produce in the short run? If your answers differ, why? Question 8 Chapter 9 Question 9 Also: Assume the market for textiles is perfectly competitive and in long run equilibrium. Then a large fire in the garment district destroys numerous textile factories. What will be the short run effect on the market price and quantity? What will be the short run effect on the typical textile firm’s profit and quantity produced? What will be the long run price and quantity in the market? What will be the long-run profit and quantity produced by a typical firm?...
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