Exam 22: Industry Supply

On a small island, papayas can only be sold in the market in the center of the island. Although papayas only cost $1 to raise, they can be sold in the market for $3. But it costs $.10 per kilometer to transport each papaya to market. If an acre of land grows 200 papayas, how much rent does an acre of land 4 kilometers from the market command?

The cheese business in Lake Fon-du-lac, Wisconsin, is a competitive industry. All cheese manufacturers have the cost function C = Q² + 9, while demand for cheese in the town is given by Q_d = 120 - P. The long-run equilibrium number of firms in this industry is

A firm uses a single input to produce its output, which is sold in a competitive market. It gets quantity discounts on purchases of its input. If it buys x units of the input, the price it must pay per unit of input is + 4. If it buys no inputs, it doesn't have to pay anything. The firm's production function is f(x) = 40x - x². If the price of the firm's output is 1, the profit-maximizing amount of input to buy is

In East Icicle, Minnesota, on the northern edge of the corn belt, the growing season is short and the soil is poor. Corn yields are meager unless a great deal of expensive fertilizer is used. In Corncrib, Illinois, the land is fertile and flat and the growing season is 20 days longer. For any given expenditure per acre, corn yields are far greater than in East Icicle. Farmers in both places are profit maximizers who grow corn.

On a tropical island there are 100 potential boat builders, numbered 1 through 100. Each can build up to20 boats a year, but anyone who goes into the boatbuilding business has to pay a fixed cost of $19.Marginal costs differ from person to person. Where y denotes the number of boats built per year, boat builder 1 has a total cost function c(y) = 19 + y. Boat builder 2 has a total cost function c(y) = 19 + 2y, and more generally, for each i, from 1 to 100, boat builder i has a cost function c(y) = 19 + iy. If the price of boats is 25,how many boats will be built per year?

The bicycle industry is made up of 100 firms with the long-run cost curve c(y) = 2 + ( ) and 120 firms with the long-run cost curve c(y) = . No new firms can enter the industry. What is the long-run industry supply curve at prices greater than $2?

On a tropical island there are 100 potential boat builders, numbered 1 through 100. Each can build up to 16 boats a year, but anyone who goes into the boatbuilding business has to pay a fixed cost of $15. Marginal costs differ from person to person. Where y denotes the number of boats built per year, boat builder 1 has a total cost function c(y) = 15 + y. Boat builder 2 has a total cost function c(y) = 15 + 2y, and more generally, for each i, from 1 to 100, boat builder i has a cost function c(y) = 15 + iy. If the price of boats is 40, how many boats will be built per year?

A firm uses a single input to produce its output, which is sold in a competitive market. It gets quantity discounts on purchases of its input. If it buys x units of the input, the price it must pay per unit of input is + 3. If it buys no inputs, it doesn't have to pay anything. The firm's production function is f(x) = 45x - x². If the price of the firm's output is 1, the profit-maximizing amount of input to buy is

A competitive industry has 10,000 identical firms. For each firm in the industry, the long-run cost of producing y units of output is c(y) = $100 + y2 if y > 0 and c(0) = 0. The government imposes a lump sum tax of $300 on each firm in the industry. Firms can avoid this tax only by going out of business. There is free entry and exit into this industry. In the long run, the number of firms

Chirimollas grow only on the island of Socorro, off the coast of Mexico. They need very little soil, so virtually an unlimited supply can be grown at a cost of $4 per unit. When they are exported to the United States, half of the chirimollas that are shipped rot on the boat and are dumped in the ocean. Shipping costs are $1 for every unit that is put on board a ship. The demand function for chirimollas in the United States is given by the equation q = 10,000 - 20p². If chirimollas are competitively supplied, the number of units that are sold in the United States will be

The short-run industry supply curve can be found by horizontally summing the short-run supply curves of all the individual firms in the industry.

In a certain industry, the supply curve of any firm is S_i(p) = . If a firm produces 5 units of output, what are its total variable costs?

The bicycle industry is made up of 100 firms with the long-run cost curve c(y) = 2 + ( ) and 60 firms with the long-run cost curve c(y) = . No new firms can enter the industry. What is the long-run industry supply curve at prices greater than $2?

In the absence of government interference, there is a constant marginal cost of $5 per ounce for growing marijuana and delivering it to buyers. If the probability that any shipment of marijuana is seized is .30 and the fine if a shipper is caught is $35 per ounce, then the equilibrium price of marijuana per ounce is

In a competitive market, if both demand and supply curves are linear, then a per-unit tax of $10 will generate exactly the same deadweight loss as a per-unit subsidy of $10.

A firm uses a single input to produce its output, which is sold in a competitive market. It gets quantity discounts on purchases of its input. If it buys x units of the input, the price it must pay per unit of input is + 4. If it buys no inputs, it doesn't have to pay anything. The firm's production function is f(x) = 60x - x². If the price of the firm's output is 1, the profit-maximizing amount of input to buy is

The cheese business in Lake Fon-du-lac, Wisconsin, is a competitive industry. All cheese manufacturers have the cost function C = Q² + 16, while demand for cheese in the town is given by Q_d = 120 - P. The long-run equilibrium number of firms in this industry is

In the absence of government interference, there is a constant marginal cost of $6 per ounce for growing marijuana and delivering it to buyers. Suppose that government authorities seize shipments whenever they find them and resell the marijuana that they seize on the open market. The probability that any shipment of marijuana is seized is .50. If a shipment is seized, there is no other punishment besides loss of the marijuana that is seized. The effect of the government action is to

Two firms constitute the entire doghouse industry. One has a long-run cost curve of 3 + 4 and the other has a long-run cost curve of 10 + . If no new firms enter the industry, at which of the following prices will exactly one firm operate?

In a certain industry, the supply curve of any firm is S_i(p) = . If a firm produces 5 units of output, what are its total variable costs?