A firm selling output in a competitive market produces output using fixed factors and one variable factor. The short run production function is equation where x is the amount of variable factor used. The price of the output produced is $2 and the price of variable factor is $10. In the short run, what is this firm's maximum profit?

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skytermite28Lv1

2 Jun 2021

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Suppose that the marginal cost of producing output, q, in the short-run for a competitive firm is MC = 10 + 8q. The market price of the firm's product is $25.

a. (2 pts) What level of output will the firm produce to maximize its profits?

b. (3 pts) Assume that the firm's fixed costs are $5, and the firm's average variable cost is given by AVC = 10 + 4q. What are the short-run total costs at the level of output the firm produces?

c. (3 pts) What are the profits in the short-run? d. (10 pts) Show the level of profits in a graph.

apricotoyster639

Which of the following statements is correct?

a. The positively sloped portion of a price-taking firm's short-run marginal cost curve, above its point of minimum short-run average variable cost, is this firm's short-run supply curve.

b. In the short-run, for prices below SAVC, the price-taking firm will choose to produce no output.

c. In the short-run, a price-taking firm will produce a level of output for which SMC = p, where p is the market price at which it sells its output.

d. All of the above

sangriagoldfish771

36. Suppose that a perfectly competitive constant cost industry is initially in short and long-run equilibrium. In general, what will be the effect of an increase of $10 per unit in variable costs on the short-run cquilibrium price, the short-run industry output, the short-run output of the firm, and the short-run profit of the firm? (A) no change in price, industry output, firm output, or profit (B) increase in price, industry output, firm output, and profit ferincrease in price, industry output, and firm output, but decrease in profit ((D) idcrease in price, decrease in firm output and industry output and profit Vet increase in price and industry output, decrease in profit but no change in firm output (F) increase in price and firm output, decrease in profit but no change in industry output (G) increase in firm output and industry output, decrease in profit but no change in price (H) no change in price, firm output, or industry output but a decrease in profit (I) no change in price, firm output, or profit, but a decrease in industry output (J) none of the above

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