Answered: 1- Suppose that the total cost function…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1- Suppose that the total cost function of a firm is given as follows;
TC = 500 + 2Q2
And the price of the firm’s product is determined by the market equilibrium at $100.
a- Set the profit maximizing condition . Find the profit maximizing output level for this firm .
b- What is the total revenue ?
c- What is the total cost ?
d- What is the profit earned by the firm ?
e- Illustrate your answer by using a well-labeled graph .
f- Denote the break even price level with Pb on the same graph .
g- Denote the shut down price level with Ps on the same graph.
h- Show the firm’s supply curve on the same graph .
i- Does the firm function in short-run or long-run ? Why ?

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