Question
A poster company produces posters that are sold in tubes of 1,000 rolls. The market is perfectly competitive, with rolls currently selling at $90 per
A poster company produces posters that are sold in tubes of 1,000 rolls. The market is perfectly competitive, with rolls currently selling at $90 per thousand. The company’s total and marginal cost curves are:
TC = 200,000+0.001Q2
MC = 0.002Q
where Q is measured in thousand roll bundles per year.
a. Calculate the company’s profit maximizing quantity. Is the firm earning a profit?
b. When should this company shut down?
Step by Step Solution
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Step: 1
To find the profitmaximizing quantity we need to determine the level of output where marginal cost M...
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Microeconomics
Authors: Michael Parkin
11th edition
133019942, 978-0133020250, 133020258, 978-0133019940
