A firm has short run TC:
TC = 100 + 2 Q + Q2 with MC = 2 + 2 Q
1) Find ATC and AVC functions
2) If P = 25, how much will the firm produce in the SR?
3) If P = 20, how much will the firm produce in the SR?
4) Assuming the firm has the same cost curves in the LR, how much will it produce in the LR?
TC = 100 + 2Q + Q^2, MC = 2 + 2Q.
1) "ATC = TC\/Q = 100\/Q + 2 + Q."
AVC = VC/Q = 2 + Q.
2) If P = 25, then the firm will produce the next Q in the SR:
P = MC,
2 + 2Q = 25,
Q = 11.5 units.
3) If P = 20, then the firm will produce the next Q in the SR:
P = MC,
2 + 2Q = 20,
Q = 9 units.
4) If the firm has the same cost curves in the LR, then it will produce the next Q in the LR:
MC = ATC,
100/Q + 2 + Q = 2 + 2Q,
Q - 100/Q = 0,
"Q^2 = 100,"
Q = 10 units.
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