Suppose you are managing a firm in a perfectly competitive industry. Your demand, supply and cost functions are given by:Qd = 35 – 2P ; QS = 25 + P ; and TC(Q) = C(Q) = 50 + 10Q + 2Q2What is the equilibrium price and quantity in this market?What is your firm’s MC function?In the short run, what is the profit maximizing level of output of the firm (i.e. how muchoutput should the firm produce in order to maximize profit)?How much profit is your firm earning, in the short-run?What adjustments should be anticipated in the long run?

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Answered: Suppose you are managing a firm in a…

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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Suppose you are managing a firm in a perfectly competitive industry. Your demand, supply and cost functions are given by:

Qd = 35 – 2P ; QS = 25 + P ; and TC(Q) = C(Q) = 50 + 10Q + 2Q2

What is the equilibrium price and quantity in this market?
What is your firm’s MC function?
In the short run, what is the profit maximizing level of output of the firm (i.e. how much

output should the firm produce in order to maximize profit)?
How much profit is your firm earning, in the short-run?
What adjustments should be anticipated in the long run?

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