Answered: 1.- A company that works in a perfectly…

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.- A company that works in a perfectly competitive market has a total cost function:

TC = Q³- 36Q² + 540Q + 600

The supply and demand functions in that market are:

Q_S = 5P -500

Q_d = 4,000 -10P

a) How much should you produce to maximize your profits?

b) Find what benefit you will get

c) Calculate the closing point for the company

d) Represent graphically the market equilibrium and that of the company, including the closing point

e) Locate the rectangle that represents profits on the company's equilibrium graph. Calculate your área considering the values taken by the base and the height. Validate that it reaches the same result (or very close) to the one obtained in part b).

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