6. The market for a type of carpet known as KS-12 is perfectly competitive. Suppose that all firms have the

following total cost function.

TC = 400,000 + 0.001q2

MC = .002q

where q is output (measured in yards) per time period. The price is currently $20 per yard. Assume that price equals marginal revenue.

1. Find the short-run profit-maximizing output that each firm should produce, and compute operating

profits and total profits. Explain and show your calculations.

To maximize profits, firms need to equate MR and MC.

20=.002q 20/.002=q 10000=q