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Consider a firm in a perfectly competitive market with total costs given by TC = Q3 -15Q2 + 100Q + 30

a.) What is this firm's marginal cost function? Over what range of output is the firm's marginal costs decreasing? Increasing?

b.) Suppose that the market price is $52. What is this firm's profit-maximizing level of output? How do you know this is the profit-maximizing output? How much profit does this firm earn by producing the profit-maximizing output?

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Divya Singh
Divya SinghLv10
28 Sep 2019
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Related questions

Question:

Evaluate the following statement:

In the short-run, information about a perfectly competitive firm's fixed costs is needed to determine both the profit-maximizing level of output and the amount of profit earned when producing that level of output.

Answer:

The profit-maximizing level of output in a perfectly competitive market is determined at the level where marginal revenue (MR) equals marginal cost (MC). Marginal revenue is the additional revenue earned by selling an additional unit of output, while marginal cost is the additional cost of producing an additional unit of output (Farnham, 2014). Additionally, in order to find the amount of profit earned, we need to know the total cost and total revenue amounts. Total cost is the total of variable and fixed cost. Therefore, in short-run production, a firm's fixed cost is needed to determine both the profit-maximizing level of output and the amount of profit earned when producing that level of output.

Farnham, P (2014) Economics for Managers 3rd edition

~Beth

I need a peer reply for this, please.

For a perfectly competitive firm, total cost: TC = 300Q - 20Q2 + .5Q3.

A. Determine the firm's marginal cost (MC) and Average Total Cost (ATC):

B. If Price = 146, what quantity will the perfect competitor produce at?

Hint: use the quadratic rule and the higher quantity

C. If Price = 146, what is the perfect competitor's economic profit?

Hint: You need ATC at this output level

D. Determine the firm's long-run profit-maximizing output and price.

Hint: See 4b.

 

 

 

 

 

 

Peter's pencil is a perfectly competitive firm producing pencils. Suppose Peter is producing, 1,000 pencil an hour. If the total cost of 1,000 pencils is $500, the market price per pencils is $2, then peter
 
A. Has an economic profit because marginal revenue is equal to marginal revenue is equal to marginal cost at this output level.
B. Should decrease his output to increase his profit.
C. Is not maximizing his profit but is earning a normal profit anyway.
D. Should increase his output to increase his profit.
E. Is maximizing his profit and is earning an economic profit.

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