  # 3. Consider a competitive firm with total costs given byTC(q) 10010q+ q?The firm faces a market price p = 50(a) Write expressions for total revenue TR and marginal revenue MR as functions ofoutput q(b) Write expressions for average total cost ATC, average variable cost AVC, andmarginal cost MC as functions of output q(c) For what value of output is ATC minimized?1(d) Find the profit maximizing level of output q. At this level of output, what areTR, TC, ATC, and *?(e) Graph the ATC, AVC, MC, and MR curves in a single graph, and indicate theprofit maximizing level of output. If there are profits, shade the region corre-sponding to profit and label it.(f) If fixed costs increase from 100 to 500, what happens to the profit maximizinglevel of output, TR, TC, and ?(g) If fixed costs increase from 100 to 500, should the firm continue to operate in theshort-run? What about the long-run?

Question help_outlineImage Transcriptionclose3. Consider a competitive firm with total costs given by TC(q) 10010q+ q? The firm faces a market price p = 50 (a) Write expressions for total revenue TR and marginal revenue MR as functions of output q (b) Write expressions for average total cost ATC, average variable cost AVC, and marginal cost MC as functions of output q (c) For what value of output is ATC minimized? 1 (d) Find the profit maximizing level of output q. At this level of output, what are TR, TC, ATC, and *? (e) Graph the ATC, AVC, MC, and MR curves in a single graph, and indicate the profit maximizing level of output. If there are profits, shade the region corre- sponding to profit and label it. (f) If fixed costs increase from 100 to 500, what happens to the profit maximizing level of output, TR, TC, and ? (g) If fixed costs increase from 100 to 500, should the firm continue to operate in the short-run? What about the long-run? fullscreen
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Step 1

(e) The graph below shows the ATC, AVC, MC and MR curve for the competitive firm. Quantity corresponding to point A where P = MC that is 20 units is the profit-maximizing level of output. In the same graph, rectangle ABCD is the economics profit associated with the profit-maximizing output and is shaded in the graph below.

Step 2

(f) An increase in the fixed cost from 100 to 500 will not going to affect the profit-maximizing output as fixed cost is not going to affect marginal cost and hence will not going to affect profit-maximizing output. Since the output is the same, the total revenue of the firm will be the same as total revenue is the product of quantity produced and market price. This in...

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