Can someone help me solve this microeconomics problem? Please post a detailed/ s
ID: 1118495 • Letter: C
Question
Can someone help me solve this microeconomics problem? Please post a detailed/ step-by-step explanation. Thanks!
A single competitive firm has the short-run total cost function: TC=500 + 40q-5q2 +q. (a) State the equations for (i) MC, (ii) AVC, and (iii) ATC. (b) A what price/quantity combination will the firm break even? You probably need a calculator to compute this (c) At what price/quantity combination will the firm shut down? (d) Graph the information from parts (a) -(c (e) If the market price is 130, what is the firm's output and profit? (f) If the market price is 30, what is the firm's output and profit? g) If the market price is 50, what is the firm's output and profit?Explanation / Answer
a). MC = dTC/ dTq = 40 - 10q + 3q2 Marginal cost is the cost on production of one more unit of a commoditity. Thus the equation is just differentiated by "q"
AVC = (40q - 5q2 + q3)/ q = 40 - 5q + q2
In calculating the AVC, we assume 500 to be the fixed cost since it is a constant, which other terms in the equation are divided by "q", which is the total quantity.
ATC = (500+40q - 5q2 + q3) / q = 500/q + 40 - 5q + q2
While calculating ATC, the entire equation is divided by "q", which is the total quantity.
b).
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