Suppose a perfectly competitive firm has the total cost function TC = 50 + 80q - 10q2 + 0.6q3.
a) What is the fixed cost? What is Variable Cost?
b) What is Marginal Cost equal to? What is the Average Variable Cost equal to?
c) Find an equation for the inverse supply curve of the firm. Hint: the supply curve presumes profit-maximizing outputs at any market price.
d) Below which market price (a number) will this firm choose to produce 0 output?
Suppose a perfectly competitive firm has the total cost function TC = 50 + 80q - 10q2 + 0.6q3.
a) What is the fixed cost? What is Variable Cost?
b) What is Marginal Cost equal to? What is the Average Variable Cost equal to?
c) Find an equation for the inverse supply curve of the firm. Hint: the supply curve presumes profit-maximizing outputs at any market price.
d) Below which market price (a number) will this firm choose to produce 0 output?
For unlimited access to Homework Help, a Homework+ subscription is required.
Related textbook solutions
Related questions
Given following Price and Total Cost functions:
P = 120 - 7Q
TC = 40 + 70Q - 10Q2 + 0.6Q3
Where P = price, and Q is output.
Fill in the table below and answer the questions below the table.
Q |
P |
FC |
TVC |
TC |
TR |
Profit |
0 |
||||||
1 |
||||||
2 |
||||||
3 |
||||||
4 |
||||||
5 |
||||||
6 |
||||||
7 |
||||||
8 |
||||||
9 |
||||||
10 |
If your company's goal is to maximize profit, answer the following questions below:
What price will you charge for your product?
What quantity will you produce?
And what would be your maximum profit or minimum loss at the price and output you chose?
2. If your company's goal is to maximize total revenue, answer the following questions below:
What price will you charge for your product?
What quantity will you produce?
And what would be your maximum total revenue at the price and output you chose? (3 points)
Question 3
Given a firm with the following cost data, fill in the table below.
Q = OUTPUT TFC = Total Fixed Cost AVC = Average Variable Cost ATC = Average Total Cost TVC = Total Variable Cost MC = Marginal Cost TC = Total Cost
Q |
FC |
TVC |
TC |
AVC |
ATC |
MC |
0 |
--- |
--- |
--- |
|||
1 |
10 |
|||||
2 |
||||||
3 |
10 |
10 |
||||
4 |