Exam 21: Firm Supply

A profit-maximizing dairy farm is currently producing 10,000 gallons of milk per day. The government is considering two alternative policies. One is to give the farm a lump sum subsidy of $500 per month. The other policy is to give the farm a subsidy of $.05 per gallon of output.

The change in producer's surplus when the market price changes from p1 to p2 is half of the area to the left of the marginal cost curve between p1 and p2.

A firm faces competitive markets both for its inputs and its outputs. If its long-run supply curve is q = 3p,then it cannot have constant returns to scale.

Suppose that Dent Carr's long-run total cost of repairing s cars per week is c(s) = 3s2 + 108. If the price he receives for repairing a car is $18, then in the long run, how many cars will he fix per week if he maximizes profits?

Irma's production function is f(x1, x2) = . If the price of factor 1 is w1 = $5 and the price of factor 2 is w2 = $20, then her supply function is given by the equation

A firm produces one output, using one input, with the production function , where x is the amount of input. The cost function for this firm is proportional to the price of the input times the cube of the amount of output.

Suppose that Dent Carr's long-run total cost of repairing s cars per week is c(s) = 3s2 + 12. If the price he receives for repairing a car is $24, then in the long run, how many cars will he fix per week if he maximizes profits?

Irma's production function is f(x1, x2) = . If the price of factor 1 is w1 = $3 and the price of factor 2 is w2 = $9, then her supply function is given by the equation

A competitive, capitalistic firm produces gift-wrapped pieces of the Berlin wall, using the standard Marxian inputs, K and L. The production function is , where y is the number of pieces produced.Neglect the use of the wall itself. The price of capital, K, is r, and the price of labor, L, is w

A firm's production function is f(x1, x2) = . If the price of factor 1 is w1 = $5 per unit and the price of factor 2 is w2 = $25 per unit, then its supply function is given by the equation S(p) =

A competitive firm produces its output according to the production function y = min{x2, 100}. Let w be the price of the factor x, and let the price of output be $1.The demand for x, when the price of x is w, is

A firm has the long-run cost function C(q) = 7q2 + 175.In the long run, it will supply a positive amount of output, so long as the price is greater than

A firm has the long-run cost function C(q) = 6q2 + 486.In the long run, it will supply a positive amount of output, so long as the price is greater than

A firm has the long-run cost function C(q) = 3q2 + 27.In the long run, it will supply a positive amount of output, so long as the price is greater than

Price equals marginal cost is a sufficient condition for profit maximization.

A competitive firm has a long-run total cost function c(y) = 3y2 + 675 for y > 0 and c(0) = 0. Its long-run supply function is described as

A firm in a competitive industry takes account of the fact that the demand curve it confronts has a significant negative slope.

Two firms have the same technology and must pay the same wages for labor. They have identical factories, but firm 1 paid a higher price for its factory than firm 2 did. If they are both profit maximizers and have upward-sloping marginal cost curves, then we would expect firm 1 to have a higher output than firm 2.

Mr. O. Carr has the cost function c(y) = y2 + 100 if his output, y, is positive and c(0) = 0. If the price of output is 25, Mr. Carr's profit-maximizing output is zero.

Marge Costa produces plastic dog dishes using a process that requires only labor and plastic as inputs and has constant returns to scale. With the process she is currently using, a laborer can turn out 30 dog dishes an hour. The wage rate is $9 per hour. The plastic in a dog dish costs Marge $.10. She has no other costs besides labor and plastic. Marge faces a perfectly competitive market for plastic dog dishes, and she decides that she is maximizing profits when she makes 300 dog dishes an hour. What is the market price of dog dishes?