Suppose a firm has a total cost function, T C = 3/8(Q^2) ? 50, and therefore marginal costs of MC = 3/4Q. Assume the market for this firm’s goods is perfectly competitive with a market price, P = 24.

(a) Given the information above, is the firm in the short-run or long-run? (1 point)

(b) Write down the firm’s marginal revenue equation. (1 points)

(c) How many units should the firm produce if it wants to maximize profit? (3 points)

(d) How much profit will the firm make when it maximizes profits? (2 points)

(e) Write an equation for the firm’s short-run average variable cost of production. (2 points) (f) Write the condition for whether a firm should continue to operate or shut down. Should the firm in this example shut down or operate? (2 points)

Answer rating: 100% (QA)

a To determine if the firm is in the shortrun or longrun we need more information about the firms ... View the full answer