Analyze the firm position in terms of shutdown condition

Reference no: EM133440658

QUESTION

A competitive firm sells its product at a price of $100 per unit. Its total cost of production is represented by the following cost function:

C(Q) = 1,000,000 + 0.01Q2, and the corresponding marginal cost function is: MC(Q) = 0.02Q.

Where Q is output rate (units per time period).

a. Determine the output rate that maximizes profit or minimizes losses in the short run.

b. How much profit (loss) will the firm make?

c. Analyze the firm's position in terms of the shutdown condition. Should the firm continue production in the sort run? How about in the long run? Explain.

Reference no: EM133440658

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