Homework 4 - ECON 1100: Intermediate Microeconomics...

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ECON 1100: Intermediate Microeconomics Instructor: Sandra Orozco Homework 4 Due date: October 13, 2010 IMPORTANT NOTE: Do not forget to label your graphs properly!!! Abbreviations: SMC= short-run marginal cost SAC= short-run average cost STC= short-run total cost 1 . (20 points) Ron’s Window Washing Service is a small business that operates in the perfectly competitive residential window washing industry in Evanston, Illinois. The short- run total cost of production is STC(Q) = 40 + 10Q + 0.1Q 2 , where Q is the number of windows washed per day. The prevailing market price is $ 20 per window. a) How many windows should Ron wash to maximize profit? b) What is Ron’s maximum daily profit? 2 . (20 points) The bolt- making industry currently consists of 20 producers, all of whom operate with the identical short- run total cost curve STC( Q) = 16 + Q 2 , where Q is the annual output of a firm. The market demand curve for bolts is D(P) = 110 - P , where P is the market price. a) Assuming that the fixed cost for each firm is $ 16, what is a firm’s short- run supply
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This note was uploaded on 03/10/2012 for the course ECON 1100 taught by Professor Unver during the Fall '06 term at Pittsburgh.

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Homework 4 - ECON 1100: Intermediate Microeconomics...

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