Answered: Consider a firm whose total cost…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter7: Perefect Competition

Section: Chapter Questions

Problem 5SQP

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Question

Consider a firm whose total cost function is 2q
3 – 6q2 + 13q.
a. If the price of a unit of output is $13, what is the profit-maximizing value of q?
b. Find the average cost function of the firm? What is the firm’s minimum average cost?
c. What is the equilibrium price of output? How much does each firm produce at equilibrium
price? What is the firm’s short-run and long-run average cost at this quantity? What is each
firm’s profit at the equilibrium price and quantity?

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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