Consider a competitive firm whose cost is given by C = 60 + 2Q + 4Q 2
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Question:
Consider a competitive firm whose cost is given by
C = 60 + 2Q + 4Q2 .
The product sells at $26 per unit.
(1) Find the optimal quantity of output in the short run.
(2) Evaluate the profitability of the optimal quantity of output that you found in (1).If it is a loss, make a decision whether or not the firm should shut-down.Provide a reason for your decision.
(3) What long-run adjustments should you expect?Explain.
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