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More Calculation Exercises

The document contains various economic problems related to market equilibrium, tax implications, and production costs for different goods. It includes calculations for equilibrium price and quantity, effects of government interventions like taxes and subsidies, and profit maximization for firms in competitive markets. Each section presents distinct demand and supply functions, requiring analysis of market conditions and firm behavior under different scenarios.

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7 views3 pages

More Calculation Exercises

The document contains various economic problems related to market equilibrium, tax implications, and production costs for different goods. It includes calculations for equilibrium price and quantity, effects of government interventions like taxes and subsidies, and profit maximization for firms in competitive markets. Each section presents distinct demand and supply functions, requiring analysis of market conditions and firm behavior under different scenarios.

Uploaded by

tranhaiyen82lx
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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TYPE 1A:

A market has the demand function and the supply function as follows:
Qd = - P + 15
Qs = 2P + 6
a. Determine the equilibrium price and equilibrium quantity
b. If the government imposes a maximum price of $7, does a shortage or surplus (or
neither) develop? What are the price, quantity supplied, quantity demanded, and size of
the shortage or surplus? Is it not binding or binding price ceiling?
c. If the government imposes a minimum price of $7, does a shortage or surplus (or
neither) develop? What are the price, quantity supplied, quantity demanded, and size of
the shortage or surplus? Is it not binding or binding price floor?

TYPE 1B:
1. Good A has demand and supply functions as follows:
Ps = 48 + 4Q
Pd = 84 – 2Q
In which P is measured as 1000/kg and Q is measured in ton
Questions:
a. Calculate equilibrium price and quantity
b. If the government imposes a tax of 2000/kg on producers, what is new price and
quantity equilibrium? Calculate tax incidence on buyer and producer

2. Good A has demand and supply functions as follows:


Qd = -4P + 12
Qs = P + 8
Questions:
a. Calculate equilibrium price and quantity. Determine the price elasticity of
demand at equilibrium. To increase turnover should the firm increase or
decrease price? Why?
b. If the government imposes a tax of 0.5/unit to producers, what is the price the
buyers have to pay and the price the producers receive?

TYPE 2
3. Good A has demand and supply functions as follows:
Qd = -2P + 18
Qs = 2P +12
Questions:
a. Calculate equilibrium price and quantity. Determine the price elasticity of
demand at equilibrium. To increase turnover should the firm increase or
decrease price? Why?

1
b. If the government gives a subsidy of 0,2/unit to producer, what is the price the
buyers have to pay and the price the producer received.

4. Good A has demand and supply functions as follows:


Qd = -5P + 20
Qs = P +5
Questions:
a. Calculate equilibrium price and quantity. Determine the price elasticity of
demand at equilibrium. To increase turnover should the firm increase or
decrease price? Why?
b. If the government gives a subsidy of 6/unit to producers, what is the price the
buyers have to pay and the price the producer received.

TYPE 3
5. A firm in competitive market has total production cost function as follows:
TC = 4Q2 + 16Q + 300
a. At P = 50, determine Q when the firm maximizes profit. Calculate total
profit
b. Determine the firm's break even price and output

6. A perfectly competitive firm has total production cost function as follows:


TC = Q2 + Q + 100
s. What is FC, AC, AVC, and MC?
b. If P = 27 what is the quantity of output when the firm maximizes profit?
Calculate that maximum profit.

TYPE 4
7. A firm has demand function and total production cost as follows:
Qd = - P + 35
TC = 2Q2 + 2Q + 10
Questions:
a. When firm maximize profit, calculate P, Q, TR, and maximum profit
b. Suppose firm has to pay a tax of 9/unit, calculate new maximum profit

TC (tax) = 2Q2 + 2Q + 10 + 9Q

8. A firm has demand function and total production function as follows:


Qd= -P/2 +60
TC = Q2 + 6Q + 13
a. To maximize profit, what is P, Q, TR and maximum profit

2
b. If the government imposes a fixed tax of 120, what is P, Q and maximum
profit?
TC (tax) = Q2 + 6Q + 13 + 120

OTHERS
9. A firm is facing with a demand curve: P = 24 – 2Q
and total cost function: TC=2Q2+15
a. Calculate P1, Q1 and 1 when firm maximize profit.
b. Government imposes a 3$/ unit tax on producers. What is new P3 and Q3 to
maximize profit?
10. Total cost function of a perfectly competitive firm is: TC = Q2 + Q + 225
a. At P = 35$, calculate Q* and P to maximize profit.
b. Calculate the break-even point of this firm
c. At P = 5$, does this firm earn profit or get loss? Indentify the profit or loss. In
case the firm gets loss, should it shut down or continue to produce? Why?
11. A firm is facing with the demand curve P = 180 - Q and cost function
TC=20 +40Q +Q2 (P:$/unit, Q: units).
a. Calculate P1, Q1 and profit max P1 when this firm wants to maximize profit
and present your answer in question in a graph.
c. The government imposes $20/unit tax on producer. Calculate new P2, Q2 and
profit max when this firm still wants to maximize profit.
12. You are given the following information about the market for pair of shoes:
P = 40+Q
P = 120-Q
(P: $; Q: pairs)
a. Find the equilibrium price and quantity of shoes in this market.
b. Calculate actual quantity in this market when P=$75
c. Suppose that the government decides to impose an excise tax of $6 per pair of
shoes in this market. What will be the new equilibrium in this market?
13. A firm is facing with the demand curve: P($) = 200-Q
The firm’s cost functions is TC($)=0.5Q2 + 20Q +200
a. Calculate P1, Q1 and Profit MAX 1.

d. Government imposes $15/ unit tax on producer. Calculate new P2, Q2 and 2
when this firm still wants to maximize profit?
14. A firm in perfect competition market has cost function TC=Q2+Q+169.
a. At P=$37, calculate Q* of this firm?
b. Calculate break-even point of this firm.
c. At price P=$10, should this firm close its business? Why?

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