Profit maximizing decision

Reference no: EM1373231

Question1: XYZ Company operates in a perfectly competitive market. Due to robust economic growth XYZ company made above normal profits. Taking into account the characteristics of this market, explain what will happen to

The number of companies in the market
The market supply curve
The market price and output level of products
The profits of the firm
The output produced by the firm

Question2: XYZ Company operates in a market that produces a homogeneous good. The company is a price taker and the market price of the product is $14. The firm is currently producing 52 units of output, marginal cost is $17, average total cost is $15 and average variable cost is $9.

[A] Do you consider that the company made a profit-maximizing decision? Describe why or why not.

[B] If you answered no in question a, what operational decision should the manager of the firm make? Justify your answer.

Reference no: EM1373231

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