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Suppose that the market for auto detailing in a city is perfectly competitive. The auto detailing firms are identical and have long-run cost functions given by TC(Q) = 10Q3 – 100Q2 + 300Q. Market demand is QD = 5,000 –

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a. Find the area on the graph that illustrates the total revenue from selling 1,000 units at $100 each.
b. Find the area on the graph that indicates the variable cost of producing those 1,000 units.
c. Find

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Josie’s Pussycats sells ceramic kittens. The marginal cost of producing a particular kitten depends on how many kittens Josie produces, and is given by the formula MC = 0.8Q. Thus, the first kitten Josie produces has a marginal cost of

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a. What will the firm’s profit be if it decides to produce 20 units of output? 120 units?
b. Suppose the firm is producing 70 units of output and decides to cut output to 60. What will happen to

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Assume that the ice cream industry is perfectly competitive. Each firm producing ice cream must hire an operations manager. There are only 50 operations managers that display extraordinary talent for producing ice cream; there is a potentially unlimited supply of

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a. Are the firms in the industry earning economic profits or losses? How can you tell?
b. The condition you indicated in (a) will result in entry or exit from the aloe vera gel industry. Indicate whether we will

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Suppose that the market for eggs is initially in long-run equilibrium. One day, enterprising and profit-hungry egg farmer Atkins has the inspiration to fit his laying hens with rose-colored contact lenses. His inspiration is true genius-overnight his egg production rises

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Suppose that the restaurant industry is perfectly competitive. All producers have identical cost curves, and the industry is currently in long-run equilibrium, with each producer producing at its minimum long-run average total cost of $8.
a. If there is

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The canola oil industry is perfectly competitive. Every producer has the following long-run total cost function: LTC = 2Q3 – 15Q2 + 40Q, where Q is measured in tons of canola oil. The corresponding marginal cost function is given by

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Martha is one producer in the perfectly competitive jelly industry. Last year, Martha and all of her competitors found themselves earning economic profits.
a. If entry and exit from the jelly industry are free, what do you expect to