1. Topic: Profit-maximization under perfect competition. A perfectly competitive
ID: 1201076 • Letter: 1
Question
1. Topic: Profit-maximization under perfect competition. A perfectly competitive market is characterized by a market price of S10 A particular firm in this market experiences a total cost (TC) function of TC = 10 + (0.1 x ge ), where "g" is the level of output. This implies the firm's marginal cost function is equal to MC 0.2xq. Please calculate this firm's profit maximizing level of output and the level of profit. Please show work to receive credit. 2. Assume that the graph below repre sents the market for unskilled labor in California. Assume that the present equilibrium wage is W*-$12 per hour as shown with L* workers hired. The area “A” is consumer surplus accruing to employers that "purchase" labor, while area "B" is producer surplus accruing to workers that "supply" labor Wage, W demand for labor supply for labor Wmin- S15 W*= $12 |-- Quantity of labor It appears that California will be establishing a minimum wage of S15 per hour. On the diagram with written support indicate the impact of this law on consumer surplus, producer surplus and deadweight loss, should there be anyExplanation / Answer
P=MR=MC=AR is the equilibrium condition for a perfect competition firm.
MC=10; 0.2q=10;
q=50.
Profit = 50*10 - 10 - 0.1*2500
= 240.
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