Analyze the following two scenarios for firms in competitive markets. Suppose that TC = 100 + 15Q, where TC is total cost and Q is the quantity produced. What is the minimum price necessary for this firm to produce any output in the short run? a) $10 b) $40 c) $15 d) $100 Suppose that MC = 4Q, where MC is marginal cost. The perfectly competitive firm maximizes profits by producing 10 units of output. At what price does it sell these units? a) $100 b) $10 c) $15 d) $40
Added by Tracy V.
Step 1
This means that the price must at least cover the variable cost, which is the cost of producing each unit of output. In this case, the variable cost is 15Q. Show more…
Show all steps
Your feedback will help us improve your experience
Andrew Davis and 92 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
A monopolistically competitive firm in the long run: Select one: a. May make a positive or negative profit. b. Earns positive economic profit. c. Earns zero economic profit. d. Makes a loss. If you are given the following total cost function and the demand equation as follows: TC = 40 + 50Q + 5Q^2 P = 170 - 5Q where P is the price level, Q is the quantity sold, and TC is the total cost. The price level that maximizes profit in the above model is: (don't forget to equalize MC=MR to solve it) a. $140 b. $50 c. $110 d. $170.
Crystal W.
A competitive market is made up of 100 identical firms. Each firm has a short-run marginal cost function as follows: MC = 50.5Q, where Q represents units of output per unit of time. The firm's average variable cost curve intersects the marginal cost at a vertical distance of 10 above the horizontal axis. a. Determine the market short-run supply curve. b. Calculate the price that would make 2,000 units forthcoming per time period.
Prashant B.
A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. a. What is profit? b. What is marginal cost? c. What is average variable cost? d. Is the efficient scale of the firm more than, less than, or exactly 100 units?
Andrew D.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD