Question: 1. Suppose a perfectly competitive firm has a cost function described by TC = 200Q + Q 2 + 225 Each firms marginal revenue is

1. Suppose a perfectly competitive firm has a cost function described by

TC = 200Q + Q

2

+ 225

Each firm’s marginal revenue is $240.

a.

Find the profit maximizing level of output.

b. Is this a short-run or long-run situation? How do you know?

c.

Assuming that this firm’s total cost curve is the same as all other producers, find the long-run

price for this good.

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