Competitive Firm Suppose the competitive market price is dollar 50, and a compet

Question

Competitive Firm Suppose the competitive market price is dollar 50, and a competitive firm's total costs = 5q^2 - lOq + 150 and marginal cost = 10q -10. Solve for the profit-maximizing (or loss minimizing) quantity (q astir). What is the market equilibrium price? Should the competitive firm produce q astir? Explain why using one of the four key questions and solutions. Does the competitive firm make a profit? Explain why using one of the four key questions and solutions. How much profit (or loss) does the competitive firm make?

Explanation / Answer

TC = 5q2 - 10q + 150

(a) MC = MR

MR = price = 50 and MC = 10q -10

10q -10 = 50

q = 60/10 = 6

(b) Price is already given as $50

(c) Yes, the competitive firm should produce q = 6 for maximum benefit.

(d) Profit per unit = AR - AC

AR = price = 50

AC = TC/q = 5q -10 + 150/q

q = 6 so AC = 30-10+ 25 = 45

Profit = 50 - 45 =5

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.