A Perfectly competitive firm whose total cost equation is TC = 6 + 33Q − 9Q2 + Q3 can sell its entire output for 18 cedis per unit.

A. Derive the firm’s total revenue and profit functions.
B. What output should the firm produce in order to maximize profit. What is the profit level?

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Related questions

Consider a firm in a perfectly competitive market with total costs given by TC = Q3 -15Q2 + 100Q + 30

a.) What is this firm's marginal cost function? Over what range of output is the firm's marginal costs decreasing? Increasing?

b.) Suppose that the market price is $52. What is this firm's profit-maximizing level of output? How do you know this is the profit-maximizing output? How much profit does this firm earn by producing the profit-maximizing output?

periwinklegnat800

PROFIT MAXIMIZATION

Reminders:

Q: Quantity, TC: Total Costs, VC: Variable Costs, MC: Marginal Costs, MR: Marginal Revenue, TR: Total Revenue

1. Suppose the market for DVD movies is perfectly competitive. The industry price for the movies is $24, and a typical firm has the following total cost data:

Q	TC	VC	MC	MR	TR	Net Profit
0	10
1	33
2	53
3	70
4	90
5	114
6	143

a. Calculate the TR, MR, and MC for each level of output.

b. What condition must be met for the firm to maximize profits? What is the profit maximizing level of output and price for this firm? How much profit would be made?

2. Now suppose that some firms have been able to differentiate their DVDs, and the market has become monopolistically competitive. A typical firm now has the following demand schedule and total cost data:

Q	P	TC	VC	MC	MR	TR	Net Profit
0	40	8
1	35	20
2	30	28
3	25	40
4	20	56
5	15	76
6	10	100

a. Calculate the TR, MR, and MC for each level of output.

b. What condition must be met for the firm to maximize profits? What is the profit maximizing level of output and price for this firm? How much profit would be made?

A cloth producing firm in a perfectly competitive market has the following short-run total cost function: TC
= 6000 + 400Q – 20Q2
+ Q3
. If the prevailing market price is birr 250 per unit of cloth,
A. Should the firm produce at this price in the short-run?
B. If the market price is birr 300 per unit, what will be the profit (loss) of the firm at equilibrium?
Should the firm continue to produce or not?
C. Calculate the shut-down price of this firm?
D. Graphically derive the supply function of the firm.