A perfectly competitive firm's cost of producing q units of output is T C = 18 +
Question:
A.) The firm faces a market price p = $24. Create a spreadsheet with q = 0,1,2,...,15 where the columns are q, TR, TC, TV C, ATC, AV C, MC, and profit. Determine the profit-maximizing output for the firm and the corresponding profit. Should the firm produce this level of output or should it shut down? Explain.
B.) Suppose the competitive price declines to p = $12. Repeat the calculations of part a. Should the firm shut down?
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Total revenue is the total value of goods and services It can be determined as TR p q where p and q are price and quantity demanded respectively TC is ...View the full answer
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