A firm has a demand function Q=10 - P. The firm has constant long-run average costs of production equal to $4. The firm must sell each unit of output for the same price per unit, and the firm must produce and sell an integer amount of output. Calculate profit-maximizing values for each of the following.
a) Price
b) Quantity
c) Total profits
d) Profit margin
A firm has a demand function Q=10 - P. The firm has constant long-run average costs of production equal to $4. The firm must sell each unit of output for the same price per unit, and the firm must produce and sell an integer amount of output. Calculate profit-maximizing values for each of the following.
a) Price
b) Quantity
c) Total profits
d) Profit margin
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Assume that a firm in a perfectly competitive market can sell its product for $35 (ie price per unit of output). Furthermore, it faces the following costs:
| Output (Q) | Total Cost |
| 0 | 25 |
| 1 | 50 |
| 2 | 100 |
| 3 | 120 |
| 4 | 155 |
| 5 | 190 |
| 6 | 250 |
| 7 | 390 |
a) Calculate Total revenue (TR), Marginal Cost (MC), Fixed Cost (FC), Variable cost (VC), and Average Cost (AC).
b) What is the profit-maximizing output level?
c) Is this firm is making a profit or loss at the profit-maximizing output level? Explain.
d) Do you think the firm will continue its production in the short run?
e) What will be the long-run price in this market?
