Question
1. Under what conditions should a perfectly competitive firm continue to produce in the short run if it loses at its best level of output?
1. Under what conditions should a perfectly competitive firm continue to produce in the short run if it loses at its best level of output? And under what conditions should he close down his company? Use graphics to explain!
2. The market demand faced by the duopolist is P = 200 - 3 (Q1 + Q2). The cost function of firm I: C1 = 26Q1 and firm II: C2 = 32Q2
Find the reaction function of company I and company II!
Remember! Profit, = P * Q - C
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Principles of Economics
Authors: N. Gregory Mankiw
8th edition
1305585127, 978-1305971493, 978-1337516860, 1337516864, 978-0357539200, 978-1305585126
