Suppose a perfectly competitive firm can produce10000 bushels of corn a year at an output at which marginal revenue is equal to marginal cost. The market price of corn per bushel is $2. The firm's total costs per year are $30000 and fixed costs per year are $15000. Show and explain which of the following is true: In the short run, this firm should a) Produce 20000 bushels to try to increase economic profit. b) Produce 10000 bushels of corn because, although they are losing money, they are losing less than if they shut down. c)Shut down. d) Continue producing until the price of corn increases. b.A perfectly competitive firm, with MC=q operates in a market character,zed by the following market demand and supply conditions: Demand: Q=20000-100P Supply: Q=100P How much output does this competitive firm produce to maximize profit? Show your work graphically and algebraically.
Suppose a perfectly competitive firm can produce10000 bushels of corn a year at an output at which marginal revenue is equal to marginal cost. The market price of corn per bushel is $2. The firm's total costs per year are $30000 and fixed costs per year are $15000. Show and explain which of the following is true: In the short run, this firm should a) Produce 20000 bushels to try to increase economic profit. b) Produce 10000 bushels of corn because, although they are losing money, they are losing less than if they shut down. c)Shut down. d) Continue producing until the price of corn increases. b.A perfectly competitive firm, with MC=q operates in a market character,zed by the following market demand and supply conditions: Demand: Q=20000-100P Supply: Q=100P How much output does this competitive firm produce to maximize profit? Show your work graphically and algebraically.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Firms In Competitive Markets
Section: Chapter Questions
Problem 4CQQ
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a.Suppose a
Show and explain which of the following is true:
In the short run, this firm should
- a) Produce 20000 bushels to try to increase economic profit.
- b) Produce 10000 bushels of corn because, although they are losing money, they are losing less than if they shut down.
c)Shut down.
- d) Continue producing until the price of corn increases.
b.A perfectly competitive firm, with MC=q operates in a market character,zed by the following market demand and supply conditions:
Demand: Q=20000-100P
Supply: Q=100P
How much output does this competitive firm produce to maximize profit? Show your work graphically and algebraically.
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