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The cost function of a competitive firm is TC=25+0.01Q^2, and the corresponding marginal cost function is MC=0.02Q. a)How much would this competitive firm produce and sell when the price of the good...

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The cost function of a competitive firm is TC=25+0.01Q^2, and the corresponding marginal cost function is MC=0.02Q.
a)How much would this competitive firm produce and sell when the price of the good is $3?
b) What would be the total profit (total revenues minus total cost) made by the firm if the price of the good is $3?
c) Assuming that there are 50 identical firms in this market, (with the same cost structure), obtain the supply function of the market (industry) algebraically.
Answered Same Day Dec 23, 2021

Solution

Robert answered on Dec 23 2021
125 Votes
The cost function of a competitive firm is TC=25+0.01Q^2, and the co
esponding marginal cost
function is MC=0.02Q.
a)How much would this competitive firm produce and sell when the price of the good is $3?
Answer:
Price (P) = $3
Marginal cost (MC) = 0.02Q
A competitive firm would equate price with marginal cost to maximize the profit i.e.
3 = 0.02Q, profit maximizing competitive...
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