Question

1. A competitive firm faces a price of 136 and a total cost function of TC=7 + q2 + 6q +5
What is this firm's marginal cost function? MC(q)= 14*q+6

2. What quantity should this firm produce? Leave your answer in fraction form (if necessary).

Answer 1

$$T.C=7q^2+6q+5$$

$$M.C=\frac{d}{dq}(7q^2+6q+5)=14q+6$$

Revenue function

$$price\times quantity=136q$$

$$M.R=\frac{d}{dq}(136q)=136$$

At optimal quantity,M.C=M.R

$$14q+6=136$$

$$14q=130$$

$$q=\frac{65}{7}$$