A competitive firm has the following cost functions: SRMC(Q)=3Q²–16Q+30 and AVC(Q)=Q²-8Q+30. All of the fixed cost is sunk. At the market price P=14, how much output might the firm produce? I. Q=0 П. Q-4/3 III. Q=4 I only II only III only I and II only I and III only II and III only

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Chapter1: Making Economics Decisions
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Advanced Microeconomics, Production Theory: Perfect Competition 

A competitive firm has the following cost
functions: SRMC(Q)=3Q²–16Q+30 and AVC(Q)=Q?-8Q+30. All of the fixed cost is
sunk. At the market price P=14, how much output might the firm produce?
I. Q=0
II. Q=4/3
III. Q=4
I only
II only
III only
I and II only
I and III only
II and III only
Transcribed Image Text:A competitive firm has the following cost functions: SRMC(Q)=3Q²–16Q+30 and AVC(Q)=Q?-8Q+30. All of the fixed cost is sunk. At the market price P=14, how much output might the firm produce? I. Q=0 II. Q=4/3 III. Q=4 I only II only III only I and II only I and III only II and III only
A firm has short-run total costs given by SRTC(Q)=Q³-4Q²+6Q ahd all of the fixed cost is non-sunk.
Which of the following is true?
The firm cannot make negative profits if it chooses to produce a positive amount of
output in the short run.
The firm will make positive profits if it chooses to produce a positive amount of output
in the short run.
At P=1, the firm is making negative profits but will still choose to produce in the short
run.
At P=1, the firm is making negative profits and will not produce in the short run.
Transcribed Image Text:A firm has short-run total costs given by SRTC(Q)=Q³-4Q²+6Q ahd all of the fixed cost is non-sunk. Which of the following is true? The firm cannot make negative profits if it chooses to produce a positive amount of output in the short run. The firm will make positive profits if it chooses to produce a positive amount of output in the short run. At P=1, the firm is making negative profits but will still choose to produce in the short run. At P=1, the firm is making negative profits and will not produce in the short run.
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