Question

Suppose a firm sells in a highly competitive market where the going price is $15 per unit. Its cost equation is C = $25 + .25Q2.
A. Find the profit maximizing level of output for the firm. Determine its level of profit. Profit, π = TR-TC = (P*Q) – C = 15Q – 25 – 0.25Q2.
B. Suppose that fixed costs rise to $75. Verify this change does not affect the firm’s level of output.



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  • CreatedAugust 05, 2013
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