In the Long-Run Equilibrium of a Competitive Market, the Market

question 162

Essay

In the long-run equilibrium of a competitive market, the market supply and demand are:
Supply: P = 30 + 0.50Q
Demand: P = 100 - 1.5Q,
where P is dollars per unit and Q is rate of production and sales in hundreds of units per day. A typical firm in this market has a marginal cost of production expressed as:
MC = 3.0 + 15q.
a. Determine the market equilibrium rate of sales and price.
b. Determine the rate of sales by the typical firm.
c. Determine the economic rent that the typical firm enjoys. (Hint: Note that the marginal cost function is linear.)
d. If an output tax is imposed on ONE firm's output such that the ONE firm has a new marginal cost (including the tax) of: what will the firm's new rate of production be after the tax is imposed? How does this new production rate compare with the pre-tax rate? Is it as expected? Explain. Would the effect have been the same if the tax had been imposed on all firms equally? Explain.

Understand the calculation of federal withholding tax on commissions.

Calculate self-employment taxes based on net earnings.

Recognize the filing requirements and penalties for late or incorrect tax document submission.

Understanding the distinction and similarities between leaders and managers.

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Definitions:

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