Question

cardboard boxes are produced in a perfectly competitive market. each identical firm has a short run total cost curve of TC= 3Q^3 - 12Q^2 +16Q + 100, where Q is measured in thousands of boxes per week. calculate the output for the price below which a firm in the market will not produce any output in the short run. ( i.e., the output for the shut down price)

a 2^1/2
b. 2
c. 1/2
d. 1/square root of 2

2) uvenue cannot It at all quantities and equal to Which one of the following is false a. In a perfectly competitive market, the optimal decision of a firm is to b. The optimal quantity of a firm is determined by the following relationship M R c. Increase in the number of firms would shift the supply curve to the right. d. In the long run equilibrium, a perfectly competitive firm gets zero profit 3) Suppose that consumers see haircuts as an undifferentiated good and that there are hundreds of be negative. shut down if AVC>P barbershops in the market. The current market equilibrium price of a haircut is $20. Bob's Barbershop has a daily short-run total cost given by TC Q2 +10Q +10. How many haircuts should Bob give each day if he wants to maximize profit? 10 с. d. none of the above. 4) Cardboard boxes are produced in a perfectly competitive market. Each identical firm has a short-run total cost curve of TC - 3Q3 -12Q2 + 16Q +100, where Q is measured in thousands of boxes per week. Calculate the output for the price below which a firm in the market will not produce any output in the short run (i.e., the output for the shut-down price). S nat-AMmpr,Le~m、 3 21/2 2 60 daveda-60- o-60-126e 120 C. d. 1/v2 5) Which one of the following is false. a. An individual firm in a perfectly competitive market cannot affect the price it receives for its outp by changing the level of its output. b. In a perfectly competitive market, the price is determined by the combined output decisions of all d. For a perfectly competitive firm, the optimal quantity is determined by the following relatio int uthero its short-run marginal cost equals the firms in the market. c. A perfectly competitive firm has a downwards sloping marginal revenue curve. tho following is false.

Answer 1

4. The correct option is as below.

• b. 2

The total cost is . In this, 100 is the fixed cost, and rest is variable cost. The average variable cost would be $AVC = \frac{VC}{Q} = 3Q^2 - 12Q + 16$ . If price goes below the minimum of the AVC, the production would stop. The minimum would be where $\frac{\partial }{\partial Q}(AVC) = 0$ or $\frac{\partial }{\partial Q}(3Q^2 - 12Q + 16) = 0$ or or or . Hence, the output for the price below which the production would stop is 2 units.