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?

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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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?
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