The market demand is D=1900-20p, and the market supply is S=1000+10p.

1. A firm has cost function C = q2+100. How many outputs the firm should produce? What is the firm’s profit?(Hint: Setting supply equals to demand, we can get the market price)

2. If the market price is $10, how many outputs the firm should produce? What is the firm’s profit?

3. If the market price is $10, should the firm shut down in the short run?(Hint, comparing the profit vs the profit with 0 outputs.)

Answer rating: 100% (QA)

Lets solve the problem step by step 1 To find the firms optimal level of output we need to set the m... View the full answer