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# Econ 302 Homework #3 McLeod Due in class Friday March 22nd. Name ______________________________________________________ ID #...

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1. (20 points) Suppose honey is produced in a beehive using bees and sugar. Each honey producer uses one beehive which she rents for \$20/month. Producing q gallons of honey in one month requires spending 5q dollars bees, and 4q 2 dollars on sugar. a) (5 points) What is the total cost of producing q units of honey for an individual honey producer in a given month? b) (5 points) In general, if the total cost of producing honey is a + bq + cq 2 , then the marginal cost of producing honey is b + 2cq. Assuming each honey producer operates as a price-taker, what is the monthly supply curve for an individual producer? c) (5 points) Let Q be the total market supply, and q is the supply of an individual firm. Therefore, q = Q/n where n is the total number of firms in the market. Suppose the demand for honey is given by Q = 512-4P. Also, suppose there are 50 honey producers in the market. What is the equilibrium price of honey? d) (5 points) How much profit does an individual producer make in a month? Is this a long-run equilibrium? If the answer is yes, simply state that it is a long-run equilibrium. If the answer is no, explain whether or not the equilibrium price will rise or fall.
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Econ 302 Homework #3 McLeod Due in class Friday March 22nd.
Name ______________________________________________________
ID # ________________________________________________________
Instructions:...

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