Question

QUESTION 21 Assume a competitive firm faces a market price of $90. The total cost of the firm is given by 1 Q3 +9Q+ 1250. c- Which of the following is true in the short-run situation? [Hint: First calculate the profit-maximizing quantity and price, and then calculate the profit. If t O The firm makes profit of more than $500 O The firm makes a loss of $764 and should shut down OThe firm breaks even he firm makes a loss of $764 and should not shut down ONone of the above

Answer 1

Solution dato Giren f aces ompefitine Assumme of $90 ot total the given The Cost 3+9+12 50 fo leusng fs true the which Situation? Short aun than $S0O proft more fm makes ( he and to ss 4764 fm The mates don Shauld shut the breats even oss of $464 and mat es a Should not Shut down E NOne of t above (Competitihe martet) MPmarket price

+ 12 SO the equaticm diflauntate d dx (x) dc -Q (costent) O dc de 2+9 MC MR At equilbnum 81 TR 90*q 810

TC- 2 XAX&) + &) + |2$D asて! 243 > 438 +1250 $1S74 ProfitTR-TC thcrt See Can from C we Novo 2 2. AVC +9 AVC

Noo at AVC36 Q Shauld not the Snce P 7= AVC 2 doun Shut loss of The puo 9t a makes down. Shaid not Shut comect Option