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.
