Question

Consider a competitive rm with total costs given by TC(q) = 100 + 10q + q^2, The firm faces a market price p = 50.

(a) Write expressions for total revenue TR and marginal revenue MR as functions of output q.

(b) Write expressions for average total cost ATC, average variable cost AVC, and marginal cost MC as functions of output q.

(c) For what value of output is ATC minimized?

(d) Find the profit maximizing level of output q ∗ . At this level of output, what are TR, TC, ATC, and π?

(e) Graph the ATC, AVC, MC, and MR curves in a single graph, and indicate the profit maximizing level of output. If there are profits, shade the region corresponding to profits and label it

(f) If fixed costs increase from 100 to 500, what happens to the profit maximizing level of output, TR, TC, and π?

(g) If fixed costs increase from 100 to 500, should the firm continue to operate in the short-run? What about the long-run?

Answer 1

сили е TCC9V) - 100 + 109 + q . P = 50 a) Total Renenne (TK) - Price () grantity (9) Tele = 50q Novo, Mk z oth = obolen - 50 So, Migz 50 6) Anasage Totul Coet (ATC) = Teen do, ATC - 100 + 109 +q2 TATCG) = 100 + 10 + 9 39 39 AS, TC = 100+ log + q 2 Fixed Lost Variable cost (Vc) 80 Average Vaciable last Auc) - vel

to, Ave = 109+ Aucla)= 10+q| None Marginal last (MC) - IT 6o, McCQ) = 3 100 + 109 + 9 TMcca) = 10 +291) ") Now ATC is minimized at So, gelatina + 10+9 = 0 aq . 12) - Home +0 + 1 =0 5 9 72 100 qz 110o = 710 As, q can't be negative bo, (q = 107 - A minimized
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-ID el Pinfint Marsinnigation_condition :- MCLO) = MRL9) 80, 10 + 29, . 50 3) 2q - 50-10 940 = 20 80, A 195= 20 profit us marimnged. ut q = 20 :- TR = 509 - 50x20 - 1000 TC = 100+109 +9% = 100 + (10920) + 20 ? 100 + 200 + 400 700 = ATC = 100 + 10 + 9 = 100% +10 + 20 = 35 T (Profit) = TR - TC = 1000 - 700 = 300 Ti = 300

As per HOMEWORKLIB POLICY I can solve only till part 'd' . I request you to please post again for the remaining parts so that I can solve the rest.