A poster company produces posters that are sold in tubes of 1,000 rolls. The market is perfectly competitive, with rolls currently selling at $90 per thousand. The company’s total and marginal cost curves are:

TC = 200,000+0.001Q²

MC = 0.002Q

where Q is measured in thousand roll bundles per year.

a. Calculate the company’s profit maximizing quantity. Is the firm earning a profit?

b. When should this company shut down?

Answer rating: 100% (QA)

To find the profitmaximizing quantity we need to determine the level of output where marginal cost M... View the full answer