Question

1. Suppose that a firm operating in perfectly competitive industry has short-run cost function given by C(q) = 5+2q+9. The market price is $10. (a) What is the profit-maximizing output level for this firm? (b) What is the firm's total revenue and profits at the profit-maximizing output? (c) What is the minimum price at which the firm will produce a positive level of output in the short run?

Answer 1

C(Q)= 5+. 29tq2 Profit Maximising out furt - Pama c(0) = 5+2q + q 2 MC(a) = 2q + 2 - 20,+ 2 = 10 e = 10-2 8. (6) TR => Price x cuantity 10 xy LAMA (c) Minimum frice at which firm will produce, TVc = oq² + 2q Ave = qt2 . for minimum frice, pa Minimum of Ave P= JAVE ) . 1