Exam 24: Industry Supply-Part A

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.

In the absence of government interference,there is a constant marginal cost of $4 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

The bicycle industry y is made up of 100 firms with the long-run cost curve c(y)= 2 + (y₂/2)and 60 firms with the long-run cost curve c(y)=y₂/10.No new firms can enter the industry.What is the long-run industry supply curve at prices greater than $2?

The market for a good is in equilibrium when the government unexpectedly imposes a quantity tax of $2 per unit.In the short run,the price will rise by $2 per unit so that firms can regain their lost revenue and continue to produce.

It is possible to have an industry in which all firms make zero economic profits in long-run equilibrium.

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 .10 and the fine if a shipper is caught is $25 per ounce,then the equilibrium price of marijuana per ounce is

In a certain industry,the supply curve of any firm is S_i(p)= p/2.If a firm produces 5 units of output,what are its total variable costs?

The price elasticity of demand for gasoline in the United States is equal to 0.15.How should the price elasticity of demand for the individual firm compare to 0.15 (higher,lower,same,can't tell)? Explain why.

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 .10 and the fine if a shipper is caught is $45 per ounce,then the equilibrium price of marijuana per ounce is

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.

The possibility of more firms entering an industry in the long run tends to make long-run industry supply more price elastic than short-run industry supply.

The price elasticity of gasoline in the United States has been estimated to be 0.15.If this is so,should profit-maximizing gasoline stations raise their prices? (Explain why or why not. )

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?

In the problem discussed in your workbook,the cost of capturing a cockatoo and transporting him to the United States is about $40 per bird.Cockatoos are drugged and smuggled in suitcases to the United States.Half of the smuggled cockatoos die in transit.Each smuggled cockatoo has a 10% probability of being discovered,in which case the smuggler is fined.If the fine imposed for each smuggled cockatoo is increased to $1,200,then the equilibrium price of cockatoos in the United States will be

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 $\gt$ 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

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 .10.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

The bicycle industry is made up of 100 firms with the long-run cost curve c(y)= 2 + (y₂/2)and 60 firms with the long-run cost curve c(y)=y₂/10.No new firms can enter the industry.What is the long-run industry supply curve at prices greater than $2?

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.

If some firm in an industry has the production function F(x,y)= x^3/4 y^3/4,where x and y are the only two inputs in producing the good,then that industry cannot be competitive in the long run.

If there are constant returns to scale in a competitive industry,then the long-run industry supply curve for that industry is horizontal.