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A competitive firm has a cost function given by:

C(y)= 5 if ?? = 0

?? 2 + 25 if y>0

a.Find the quasi-fixed costs associated with this technology

b. Find the firm’s marginal cost function

c. Find the firm’s AVC function

d. Find the firm’s supply function

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Kelleb Mloyi
Kelleb MloyiLv2
28 Sep 2019

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Related questions

A competitive firm has estimated its average variable cost function as:

AVC = 20 - 0.04Q + 0.00005Q2

Total fixed cost is $500

a. The marginal cost function associated with this AVC function is SMC = _____.
b. AVC reaches its minimum at _____ units of output at which AVC = _____. The forecasted price is P = $23.60.
c. To maximize its profit, the firm should produce _____ units of output. Profit (loss) is _____.
Suppose the forecasted price is P = $10.
d. The firm should produce _____ units of output for a profit (loss) of $_____.

A competitive firm has estimated its average variable cost function as

AVC = 20 - 0.04Q + 0.00005Q2

Total fixed cost is $500

a. The marginal cost function associated with this AVC function is SMC = _______________.

b. AVC reaches its minimum at _________ units of output at which AVC = __________. The forecasted price is P = $23.60.

c. To maximize its profit the firm should produce ___________ units of output. Profit (loss) is ____________.

Suppose the forecasted price is P = $10.

d. The firm should produce ____________ units of output for a profit (loss) of $____________.

Suppose that a firm faces the demand curve, P = 100 - 3Q, where P denotes price in dollars and Q denotes total unit sales. The cost equation is TC = 200 + 22Q.

A. Determine the firm’s profit-maximizing output and price.

B. Suppose that there is a change in the production process so that the cost equation becomes TC = 80 + 12Q + Q2. Determine the resulting effect on the firm’s output and price.

C. Compared to the two different cost structures in part a and b, what has happened to the Total cost and Marginal cost at the original quantity found in part a? Also, comment on your findings here as it relates to the quantity values computed in parts a and b.

D. Suppose that the firm sells in a competitive market and faces the fixed price: P = $48. State the Total Revenue (TR) and Marginal Revenue (MR) functions, and using the cost function in part b, find the firm’s new optimal quantity.

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