Suppose that a competitive firm\'s marginal cost of producing output q (MC) is g

Question

Suppose that a competitive firm's marginal cost of producing output q (MC) is given by MC(a)-6+2q Assume that the market price (P) of the firm's product is $18 What level of output (q) will the firm produce? The firm will produce 6.00 units of output.(Enter your response rounded to two decimal places.) What is the firm's producer surplus? Producer surplus (PS) is $36.00. (Enter your response rounded to two decimal places.) Suppose that the average variable cost of the firm (AVC) is given by AVC(q) = 6 + 1 q Suppose that the firm's fixed costs (FC) are known to be $30. Will the firm be earning a positive, negative, or zero profit in the short run? In the short run, the firm's profit will be

Explanation / Answer

Answer
The firm produces at MC=P
6+2q=18
q=6
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PS=the area above MC and below price
=0.5*(18-6)*6
=$36
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Profit=total revenue-total cost
=18*36-((6+1*6)*6+30)
=546
The firm make profit of $546

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