Assume a competitive firm faces a market price of $75, a cost curve of: C = 0.25q^2 + 25q + 1,600 and a marginal cost curve of:: MC = 0.50q + 25. The firm's profit maximizing output level is 100.00 units, the profit per unit is $9.00, and total profit is: $900.00. However, if the firm wanted to maximize the profit per unit, how much would it produce?
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In a competitive market, the firm's marginal revenue is equal to the market price. Given that the market price is $75, we can set MR = MC: 0.50q + 25 = 75 Solving for q, we get: 0.50q = 50 q = 100 Show more…
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