PS4 (2) - Problem Set 4 Econ 100A Spring 2013 Due in class PROBLEM 1 A producer of hand-made furniture has a cost function of TC(q)=4000 3000q4q2 0.8q3

PS4 (2) - Problem Set 4 Econ 100A Spring 2013 Due in class...

This preview shows page 1 - 2 out of 3 pages.

Problem Set 4 Econ 100A – Spring 2013 Due in class 04/03/2013 PROBLEM 1 A producer of hand-made furniture has a cost function of TC(q)=4000+3000q- 4q 2 +0.8q 3 a. Find the fixed costs, variable costs, average fixed costs, average variable costs and marginal costs of the firm. b. Graph MC, ATC, AVC and AFC on the same graph c. Find the shutdown price and corresponding quantity. d. Suppose the company is a price-taker, and the market price is $3000 in the short-run . Will the company produce? Explain your answer mathematically. If it produces, how many units of furniture will the company produce? e. Derive the short-run market supply curve f. What is the long-run supply of the firm, assuming it has constant input prices, the industry is competitive and there is free entry to the market. PROBLEM 2 Consider an industry with three firms, with cost functions of TC(q) = 10q 2 + 1000 TC(q) = 20q 2 + 500 TC(q) = 25q 2 + 400 a. Compute and graph the supply curve for each firm (on a single graph). Make sure to take into account the shut-down decisions of each firm.
Image of page 1
Image of page 2

You've reached the end of your free preview.

Want to read all 3 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors