Answer to Question #217650 in Economics for Aayat

Question

A competitive firm sells its output at a fixed price of Rs 4 per unit. The cost function of the firm is given as: C-0.04q'-0.9 q² + 10q+5. Find the profit maximizing output level of the firm and determine their corresponding total profit, total revenue and total variable cost. Do you think the firm will continue production? Give reason.

Answer 1

$$MC=p$$

$$TC=0.04q^3-0.9q^2+10q+5$$

$$FC=5$$

$$VC=0.04q^3-0.9q^2+10q$$

$$MC=0.12q^2-1.8q+10$$

$$q_{max}=5$$

$$q_{min}=10$$