Help Profit Maximization A firm\'s cost function is C = 5Q + 0.1 Q^2 Suppose the
ID: 1200944 • Letter: H
Question
Help Profit Maximization A firm's cost function is C = 5Q + 0.1 Q^2 Suppose the market place is $10. How many units will be produced by this firm to make profit? Is this firm in the long run or in the short run? What is the lowest price at which the firm will produce? Tom owns a winery which produces red wines. He is a profit maxim taker. The market price for a bottle of red winr is $40. His costs are given by C = 0.1 Q^2 + 20 Q + 100 where Q represents the number represents the number of bottles.Explanation / Answer
MR=10
MC = dTC/dQ = 5 + 0.2Q
5+0.2Q = 10
0.2Q = 5
Q = 5/0.2 = 25
At Q = 25
TR = 25*10 = 250
TC = 5*25+0.1*625 = 125 + 62.5 = 187.5
TR>TC means the firm is in short run
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