A firm sells its product in a perfectly competitive market where
other firms charge a price of $80 per unit. The firm’s total costs
are 20+2Q+Q2. The profit-maximizing output for
your firm is:
Homework Answers
Price = $80
Total cost = 20 + 2Q + Q2
Marginal cost = dTC / dQ , (differentiation of total cost with respect to quantity)
MC = 2 + 2Q
In perfect competition, Marginal revenue = Price = Average revenue.
The profit maximizing condition of perfect competition is at the point where Marginal revenue = Marginal cost
MR = MC
80 = 2 + 2Q
78 = 2Q
Q = 39
The profit maximizing output is 39 units.
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A firm sells its product in a perfectly competitive market where
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