Attempts: 16. Problems and Applications Q6 Analyze the following two scenarios f

Question

Attempts: 16. Problems and Applications Q6 Analyze the following two scenarios for firms in competitive markets. Suppose that TC = 100 + 150, where TC is total cost and Q is the quantity produced. What is the minimum price necessary for this firm to produce Score:/2 any output in the short run? $100 O $15 $40 O $10 Suppose that MC-4Q, where MC is marginal cost. The perfectly competitive firm maximizes profits by producing 10 units of output. At what price does it sell these units? O $10 O $15 $100 0 $40 Save &Continue; Continue without saving

Explanation / Answer

Q1
Answer
The minimum price to produce is minimum average variable cost
the average variable cost=VC/Q=15/Q=15
the AVC is constant at $15
so price below $15 the firm shut down and it produce price above or equal to $15
Option second

Q2
The perfectly competitive firm produces at MC=P
the MC=4Q=4*10=$40=P
so the firm will charge the price of $40
Option fouth

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