Question
A private seller is facing a demand curve where sales at a price of $ 2 are 40 units, and sales at a price of
A private seller is facing a demand curve where sales at a price of $ 2 are 40 units, and sales at a price of $ 6 are 20 units. The cost is described by a linear function and the marginal cost is $ 4. The fixed average cost (AFC) of 20 units of production is $ 0.50. a) what is the demand function? b) what is the cost function? c) what is the most profitable price and quantity and what is the profit of the private seller? d) If conditions change, the number of producers in the market increases, so there will be perfect competition. Fixed costs is eliminated and the manufacturer's marginal cost is $ 4. What will be the sold quantity, price and profit in the market?
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