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Consider a competitive firm whose cost is given by C = 60 + 2Q + 4Q 2 . The product sells at $26 per unit.

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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