Answer to Question #200035 in Economics of Enterprise for Fahad

Question

the market price is in a perfectly competitive market is 100$. a perfectly competitive firm has a marginal cost given by MC=2+2Q. Find the profit maximizing output and revenue for this firm.

Answer 1

$$Solution$$

Given that :

$market \ price,P=\$100\\ MC=2+2Q$

Profit maximization requires that :$P=MC$

$100=2+2Q\\ 2Q=98\\ Q=\frac{98}{2}=49$

The firms revenue will be :$TR=P\times Q=100\times 49=\$4,900$