10.1 Suppose the daily demand curve for flounder at Cape May is given by Q D = 1,600 – 600P

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10.1 Suppose the daily demand curve for flounder at Cape May is given by Q D = 1,600 – 600P

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10.1 Suppose the daily demand curve for flounder at Cape May is given by Q D = 1,600 – 600P

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10.1 Suppose the daily demand curve for flounder at Cape May is given by

QD = 1,600 – 600P

where QD is demand in pounds per day and P is price per pound.

- If fishing boats land 1,000 pounds one day, what will the price be?
- If the catch were to fall to 400 pounds, what would the price be?
- Suppose the demand for flounder shifts outward to
QD = 2,200 – 600P

How would your answers to part a and part b change?

d. Graph your results.

10.6 Suppose there are 100 identical firms in the perfectly competitive notecard industry. Each firm has a short-run total cost curve of the form:

STC = 1/300 q3 + 0.2q2 + 4q + 10

and marginal cost is given by

SMC = .01q2 + .4q + 4

a. Calculate the firm’s short-run supply curve with q (the number of crates of notecards ) as a function of market price (P).

b. Calculate the industry supply curve for the 100 firms in this industry.

- Suppose market demand is given by Q = -200P + 8,000. What will be the short-run equilibrium price-quantity combination?
d. Suppose everyone starts writing more research papers and the new market demand is given by Q = -200P + 10,000. What is the new short-run price-quantity equilibrium? How much profit does each firm make?