Reference no: EM131107372
Consider a competitive firm with total costs given by TC(q) = 100 + 10q + q^2 . The firm faces a market price p = 50.
(a) Write expressions for total revenue TR and marginal revenue MR as functions of output q.
(b) Write expressions for average total cost ATC, average variable cost AV C, and marginal cost MC as functions of output q.
(c) For what value of output is ATC minimized?
(d) Find the prot maximizing level of output q∗. At this level of output, what are TR, TC, ATC, and π?
(e) Graph the ATC, AV C, MC, and MR curves in a single graph, and indicate the prot maximizing level of output. If there are profits, shade the region corresponding to profitt and label it.
(f) If fixed costs increase from 100 to 500, what happens to the prot maximizing level of output, TR, TC, and π?
(g) If fixed costs increase from 100 to 500, should the firm continue to operate in the short-run? What about the long-run?
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