Question
Firm D operates in a perfectly competitive market.The price of its product is $20 per unit. Its short-run total cost function is the following: TC
Firm D operates in a perfectly competitive market.The price of its product is $20 per unit. Its short-run total cost function is the following:
TC = 5,000 + 10Q
- What is Firm D's break-even quantity?
- Firm D's profit is $20,000.How many units did it sell to earn this profit?
- What is the firm's degree of operating leverage (DOL) at this level of sales?
- Suppose Firm D's sales increased by 10% from the number of units you computed in 2.b., above.What would be the amount of its profit?
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Economics of Strategy
Authors: David Besanko, David Dranove, Mark Shanley, Scott Schaefer
6th edition
978-1118273630, 111827363X, 978-1118319185
