Consider a perfectly competitive firm with a short-run total cost function given by TC = q2 + 100 where q is the level of output. The short-run marginal cost function is given by MC = 2q If the price of output is $60, how much output should the firm produce in order to maximize profit? Calculate the firm’s economic profit at this level of output Assuming that each firm in the industry has an identical cost function, is $60 a long-run equilibrium price for this perfectly competitive industry?
Consider a perfectly competitive firm with a short-run total cost function given by TC = q2 + 100 where q is the level of output. The short-run marginal cost function is given by MC = 2q If the price of output is $60, how much output should the firm produce in order to maximize profit? Calculate the firm’s economic profit at this level of output Assuming that each firm in the industry has an identical cost function, is $60 a long-run equilibrium price for this perfectly competitive industry?
Chapter7: Perefect Competition
Section: Chapter Questions
Problem 5SQP
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Question
Consider a
TC = q2 + 100
where q is the level of output. The short-run marginal cost function is given by
MC = 2q
- If the price of output is $60, how much output should the firm produce in order to maximize profit?
- Calculate the firm’s economic profit at this level of output
- Assuming that each firm in the industry has an identical cost function, is $60 a long-run
equilibrium price for this perfectly competitive industry?
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