Suppose a competitive firm produces spaghetti dinners. The market price of a spaghetti dinner is $20. The
Question:
a. How many spaghetti dinners should the firm make each day?
b. What if the firm has avoidable fixed costs of $1562.50?
c. What is the firm's supply function if there is no avoidable fixed cost?
d. What is the supply function if the firm has avoidable fixed costs of $1562.50?
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a The firm maximizes its profit when the marginal revenue equals the marginal cost Since the firm is in a competitive market the price is the same for all units produced Hence the demand curve is a ho...View the full answer
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