The government feels the price of oil is too high and passes a law that mandates

Question

The government feels the price of oil is too high and passes a law that mandates that Exxon price its product under competitive competitions, whereby Exxon is required to set the lowest price possible that will not result in shortages. Find this Price and Quantity. P= 100-20Q TC= 2 + 10Q+ 2.5Q^2
The government feels the price of oil is too high and passes a law that mandates that Exxon price its product under competitive competitions, whereby Exxon is required to set the lowest price possible that will not result in shortages. Find this Price and Quantity. P= 100-20Q TC= 2 + 10Q+ 2.5Q^2
The government feels the price of oil is too high and passes a law that mandates that Exxon price its product under competitive competitions, whereby Exxon is required to set the lowest price possible that will not result in shortages. Find this Price and Quantity. P= 100-20Q TC= 2 + 10Q+ 2.5Q^2
P= 100-20Q TC= 2 + 10Q+ 2.5Q^2

Explanation / Answer

The price under perfectly competitive market should equal the marginal cost

TC= 2 + 10Q+ 2.5Q^2

ATC = TC/Q =2/Q + 10 + 2.5Q

MC=dTC/dQ = 10 + 5Q

So P=MC

100-20Q = 10 + 5Q

25Q = 90

Q = 3.6

P=100-20*3.6 = 28

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