Consider a perfectly competitive market in the short-run. All firms have access to the same technology....
Consider a perfectly competitive market in the short-run. All firms have access to the same technology. the total cost of production for the firm is given by TC(q) = 113+9q 2 if q>0 and 32, if q=0.
a. Derive the supply curve for an individual firm.
b. What is the price at which firms will shutdown?
Homework Answers
a. The supply curve for an individual firm is the marginal cost curve wgwhi is derived by first order differentiating the total cost curve.
MC = 18q
b. A firm would shutdown if the price is below minimum AVC = 9q, which is minimum at q=1, AVC = 9
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