Suppose a firm sells in a highly competitive market where the going price is $15 per unit.
Question:
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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A For profit maximization the first order necessary condition is that d dQ 0 ie dTR ...View the full answer
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Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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