A perfect competitive firm estimates her cost function as given below: C = 100 + 5Q2 a. What is the firm’s fixed and marginal cost? b. If all other firms in the market sell the product at a price ¢20. How much should this firm charge for the product? c. What is the optimal level of output to maximize profits? d. How much profit will be earned? e. In the long run should this firm continue to produce or shut down? Why
A perfect competitive firm estimates her cost function as given below: C = 100 + 5Q2 a. What is the firm’s fixed and marginal cost? b. If all other firms in the market sell the product at a price ¢20. How much should this firm charge for the product? c. What is the optimal level of output to maximize profits? d. How much profit will be earned? e. In the long run should this firm continue to produce or shut down? Why
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter9: Market Structure And Long-run Equilibrium
Section: Chapter Questions
Problem 1MC
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A
a. What is the firm’s fixed and marginal cost?
b. If all other firms in the market sell the product at a price ¢20. How much should this
firm charge for the product?
c. What is the optimal level of output to maximize profits?
d. How much profit will be earned?
e. In the long run should this firm continue to produce or shut down? Why
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