Brandy\'s restaurant estimates that its total cost of providing Q metals per mon

Question

Brandy's restaurant estimates that its total cost of providing Q metals per month is given by TC=6,000 =2 Q, if brandy charges $4 per metal, what is its break even level of output? 1000 metals 1,500 metals 2,000 metals 2,5000 metals, 3,000 metals Analysis the behavior of the profit-maximizing firm in different market structures: A representative firm with short-run total cost given by TC=50+2q+2q2 operates in a competitive industry where the short-run market demand and supply curves are given by Q0 + 1,410 - 40p and Q3 = -390 + 20p.Its short-run profit maximizing level of output is 0 units, 1 units, 2 units, 5 units, 7 units Henry's Hosiery has exclusive rights to sell Yves Chevrier lingerie in the United States. The demand for Yves underwear faced by Henry is given by Q. = 250 -0.5p Henry's costs are given by TC = 50Q + 5.5 Q2. Its maximum monopoly profits are $6,750. $7,050. $7,500. $7,750. $8,750. If a cartel is working properly, its firms will likely be producing where (Mc1 is search firm i's marginal cost, MR is market marginal revenue, and P is price) MC1= MR. MC1 > MR MC1

Explanation / Answer

For equilibrium, each of the firm in the cartel must set their MR equal to the MC. The condition is the equilibrium condition at which revenue from production of additional unit will be equal to the costs incurred on that unit. The production beyond this point will result in losses for the firm and therefore the firm in the cartel will not be ready to breach the equilibrium production level. That means at MCi=MR the firms are likely to produce.

It cannot be MC>MR because this shows that cost incurred on additional unit is more than the revenue generated from that unit. This will certainly be a point where the firms will rather incur losses. Hence this is not an optimal point of production.

It can also not be MCi<MR because this shows that cost incurred on additional unit is less than the revenue generated from that unit. This will certainly be a point where the firms will rather be induced to produce more as additional unit is generating more revenue than the costs incurred on it.. Hence this is not an optimal point of production.

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