MLA Home Work 4 - Word Michael Norton Insert Draw Design Layout References Maili

Question

MLA Home Work 4 - Word Michael Norton Insert Draw Design Layout References Mailings Review View Add-ins Tell me what you want to do Share File Home Find Calibri (Body) AaBbCcDc AaBbCcDc AaBbc 1 Normal 1No Spac... Heading 1 ac Replace Paste Select Clipboard Font Paragraph Styles Editing 1. The market demand for the product is P = 30-0.75Q and the supply is P = 10 + 0.5Q. One of the firms in this market has a Total cost function as C 200 3q. Find the below a. Equilibrium output and price b. Optimal q for the individual firm. c. Profit/Loss of the firm d. Should the firm shut down or continue to produce and why? e. What would be the price under which the firm should think of shutting down and not producing and quantity in other words what would be the shutdown point? And Why shouldn't they produce, or they should produce if the price goes below or above that point? Page 1 of 1 297 words 125% 11:33 PM 11/3/2017

Explanation / Answer

P = 30-0.75Q

P = 10+0.5Q

C = 200-3q

30-0.75Q = 10+0.5Q

20 = 1.25Q

Q = 16

P = 10+0.5Q = 10+0.5*16 = 10 + 80 = 90.

Profit = Pq – C

Profit = (30-0.75q1-0.75q2)q1 – 200-3q1

dProfit/dq1 = 30-1.5q1-0.75q2 -3 =0

27 = 2.25q1

q1= 27/2.25

q1= 12

= 1080-200-270

=610

200/q -3 = 90

200/q = 93

200/93 =q

q = 2.151

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