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 firms 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 firms 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 firms 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)

Question: 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

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)

(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)

Step by Step Solution

★★★★★

3.48 Rating (155 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

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

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Suppose there are two firms with one demand function. This same (common) demand function is: [from HW] Q = 1,000 40P with MR = 25 0.05Q However, each firm has its own cost function which is...

Suppose the monopolist in Problem 12.6 incurs a marginal cost of 5.50 Euros for every unit it produces. The firm has no fixed costs. In problem 12.6 Suppose a monopolist is able to engage in perfect...

Ques 1: What is the major complaint by firms concerning the Sarbanes-Oxley act of 2012? A. the legislative maximum allowable compensation for a CEO. B. the legal requirement to disclose project...

Problem 1: Perfect Competition, Monopolistic Competition, and Monopoly In order to answer the following questions, you may want to draw graphs into the diagram below, where you already see the...

22. Suppose each mechanic must use only one wrench to fix the car, and wrenches are useless by themselves. In the long run, the firm will experience A) increasing returns to scale. B) constant...

Hello Marginal Analysis part 1A: 1. Global Corp. sells its output at the market price of $7 per unit. Each plant has the costs shown below: Units of Output Total Cost ($) 0 5 1 8 2 14 3 23 4 35 5 50...

....help me Practice Questions / Intermediate Microeconomics Exam #3 1 . A firm sells books to members of two distinct clubs that are isolated from each other. Club #1's inverse demand curve is: P1 =...

1. Bob's electronic bike shop's production function is given by q = -5 L 3 + 20L 2 +10L. The marginal product of labor is A) MP = 10 + 40L -15L 2 B) MP = 10 + 20L -5L 2 C) MP = 10L D) MP = 10 + 20L...

Reference the following information about the market demand function for questions 1 to 15. These questions are on different types of market structures - monopoly, perfect competition, Cournot...

please solve the attached questions mountWM You have been hired by Kia as manager for its Paldstan operations. Assume following is the short-run production function at their asserolilyr plant outside...

The Solow model with consumption taxes. Consider an economy with a government that collects taxes on consumption (e.g., VAT) such that Tt = TcCt and spends those revenues on the purchase of the...

Enter the number for the item that best completes each of the descriptions below. 1. Account 2. Three 3. Asset 4. Liability 5. Equity a. Owner, capital and owner, withdrawals are examples of...

The audit team is planning to examine a sample of control policies team would normally estimate the expected population deviation deviation rate on sample size? Multiple Choice The resultant sample...

Suppose that measurements of the size of butterfly wings (cm) for two related species yielded the data (a) Calculate s2pooled; (b) Give an estimate of the common standard deviation for the number of...

1. Which of the following statements about an efficient market is false? a. It reflects all relevant and available information. b. Prices will reflect such information as firm financial strength and...

The generic output below summarizes the data, given in Table D.5 of the Data Bank, on the pretest percent body fat in male and female students. Find a 99% confidence interval for the difference of...

On October 1, 2015, Chignecto Manufacturing Company purchased a piece of high-tech equipment for $90,000 cash. Chignecto estimated the equipment would have a six-year useful life and a residual value...

For the following utility functions, find the marginal rate of substitution, Discuss how MRS XY changes as the consumer substitutes X for Y along an indifference curve, Derive the equation for the...

Administrative costs and taxes would be considered __________ in a project's budget. Group of answer choices Indirect costs Fixed costs Variable costs Direct costs

What is an investment tax clientele? If the market sets implicit tax rates, why are we interested in determining the proper clientele for various investments? Why should a corporate strategist be...

Explain the check the box election. Prior to this election, how did the IRS determine whether a business was taxed at the entity level or as a pass through entity?

Following a substantial earthquake, a major West Coast university suffered $ 100 million in property damage. Suppose that this loss enabled the university to borrow an additional $ 100 million worth...

Suppose in (6.46) that the variance of the estimator of the total in psu i is V (i) = M2i S2i /mi. If you can only subsample C = ni =1 mi ssus, what values of mi minimize (6.46)?

For the supermarket example in Section 6.1, suppose that the is are the same, but that each store has

In simple random sampling, we know that a without-replacement sample of size n has smaller variance than a with replacement sample of size n. The same result is not always true for...