Question

1. Suppose, for a perfectly competitive firm, marginal cost function is given by:

   MC = Q2– 2Q + 20

Find the quantity produced (Q) at the equilibrium level of output, if price per unit of good produced is Birr 44

Answer 1

The quantity produced (Q) at the equilibrium level of output is:

P = MC,

$Q^2– 2Q + 20 = 44,$

$Q^2– 2Q - 24 = 0,$

Q = 6 units (Q = -4 is unacceptable).