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2. The manager of Keenan Foods has estimated the firm's total variable cost to be TVC = 20q + 4q 2 where TVC is in
2. The manager of Keenan Foods has estimated the firm's total variable cost to be
TVC = 20q + 4q2
where TVC is in dollars and q is in units. Keenan Foods operates in a perfectly
competitive market consisting of 50 identical firms. Fixed costs are $500.
- Assume that the market price is $100. How much output will Keenan produce, and what is the associated profit (or loss)? Will the firm operate or shut down in the short run?
- Will the number of firms increase or decrease in the long run?
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