1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginalcosts of MC = 5 + 14g, and average variable costs of AVC = 5 + 7q.(a) What are the firm's variable costs (VC)?(b) What is the firm's total cost function?(c) If the price is $75, how much does the firm supply?(d) Does the firm continue to supply this quantity in the short-run?(e) Suppose there exists a standard market demand function from consumers(downward slopping). Please provide a logical discussion about how the marketachieves short-run equilibrium.

Firms in perfect competition are price takers because they are large number of firms selling…

1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal costs of MC = 5+ 14q, and average variable costs of AVC = 5 + 7q. (a) What are the firm's variable costs (VC)? (b) What is the firm's total cost function? (c) If the price is $75, how much does the firm supply?

1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal costs of MC = 5+ 14q, and average variable costs of AVC = 5 + 7q. (a) What are the firm's variable costs (VC)? (b) What is the firm's total cost function? (c) If the price is $75, how much does the firm supply?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal
costs of MC = 5 + 14g, and average variable costs of AVC = 5 + 7q.
(a) What are the firm's variable costs (VC)?
(b) What is the firm's total cost function?
(c) If the price is $75, how much does the firm supply?
(d) Does the firm continue to supply this quantity in the short-run?
(e) Suppose there exists a standard market demand function from consumers
(downward slopping). Please provide a logical discussion about how the market
achieves short-run equilibrium.

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