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23 Aug 2018
Consider a price taking firm that produces a homogenous, divisible product in an industry characterized by no transaction costs and no barriers to entry/exit. The cost function is given by: C(q)=600+12q+q^2. Where q is the firm's output. (a) Find the AVC and ATC. (b) Find the marginal cost function. (c) Suppose the market price for the product (i.e. the price the firm will receive per unit sold) is $40. Will the firm be willing to produce at this price in the short run? If yes, how much will it produce? (d) Solve for the firm's profits.
Consider a price taking firm that produces a homogenous, divisible product in an industry characterized by no transaction costs and no barriers to entry/exit. The cost function is given by: C(q)=600+12q+q^2. Where q is the firm's output. (a) Find the AVC and ATC. (b) Find the marginal cost function. (c) Suppose the market price for the product (i.e. the price the firm will receive per unit sold) is $40. Will the firm be willing to produce at this price in the short run? If yes, how much will it produce? (d) Solve for the firm's profits.
Jamar FerryLv2
24 Aug 2018
