Assume a perfectly competitive firm\'s short-run cost is TC=100+160Q+3Q^2.If the

Question

Assume a perfectly competitive firm's short-run cost is TC=100+160Q+3Q^2.If the market price is $196,what should it do? Produce 5 units and continue operating produce 6 units and continue operating produce zero units(i.e.,shut down) Cannot be determined from the above information In the long run, the most helpful action that a monopolistically competitive from can take to maintain its economic profit is to Continue its efforts to differentiate its product. raise its price. Lower its price. do nothing, because it will inevitably experience a decline in profits. If the inverse demand curve a monopoly faces is p=100-2Q, and MC is constant at 16,then profit maximization is achieved when the monopoly sets price equal to 16. 21. 25. 58. The situation in which one firm can produce the total output of the market at lower cost than several firms is called natural monopoly. pure monopoly. ruling monopoly. cost monopoly. A cartel is a group of firms that attempts to maximize joint revenue. maximize joint profit. behave independently. increase consumer surplus . The result for the seller of being able to practice price discrimination will be higher profits lower demand elasticity. lower quantity sold. cost minimization. Second-degree price discrimination occurs when different are changed for different blocks of services. different groups of buyers are changed different prices based on their price elasticities of demand, a different price is changed for each amount of a product purchased. None of the above

Explanation / Answer

TC=100+160Q+3Q2

P=196

MC= dTC/dQ

=160+6Q

At the equilibrium of a competitive firm,

P=MC

196=160+6Q

Q=(196-160)/6

Q*=6

Therefore option B

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