Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose a firm operates in a perfectly competitive market. Suppose P=20 and MC=10Q. We also know that the total cost function is equal to 40+5Q^2

Suppose a firm operates in a perfectly competitive market. Suppose P=20 and MC=10Q. We also know that the total cost function is equal to 40+5Q^2 whether the firm operates or not. In other words, the $40 fixed costs cannot be avoided even if the firm exits the market. What is the optimal Q? Hint - don't forget the shutdown condition choose the correct option:

1) 0

2) 5

3) 4

4) 2

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economics

Authors: Stephen Slavin

11th Edition

978-0078021800, 0078021804

More Books

Students also viewed these Economics questions