Question

Assume a compettve fm faces a market price of $70, and a cost ourve of C-0003 50g 1000 (Enter your reaponse rounded to fwo decimal places-holude the minus sign The firm's proft maximizing output level is 47.17 units (onter your response rounded to two decimal places), and the per unit proft at this output level is necessary)

Answer 1

We are given the total cost equation as:

, where q is the level of output

C = 0.00373 +509 + 1000

If we substitute the value of q profit maximizing output, we will have the Total cos as follows:

C = 0.003 x 47.173 + 50 x 47.17 + 1000

C = 3673,36

Total revenue at this level of output will be price x unit, therefore 47.17 x 70 = 3301.9

So the profit = TR-C = 3301.9-3673.36 = -$371.46

This is negative because not all costs are being met but profit maximizing output is where MR=MC which must be the case here