**Educational Website Content:****Scenario:**A firm sells its product in a perfectly competitive market where other firms charge a price of $90 per unit. The firm’s total costs are given by the equation C(Q) = 50 + 10Q + 2Q².**Instructions:** Round up your answers to no decimals.**Questions:**a. **How much output should the firm produce in the short run?** Q = [Answer to be calculated]b. **What price should the firm charge in the short run?** P = $[Answer to be calculated]c. **What are the firm’s short-run profits?** Profits = $[Answer to be calculated]d. **What adjustments should be anticipated in the long run?** [Choose A, B, C, or D] - **A.** Exit will occur since accounting profits are always zero in the long run. - **B.** No firms will enter or exit at these levels of profits. - **C.** More firms will enter the industry, increasing the supply, until economic profits shrink to zero. - **D.** More firms will enter the industry since economic profits are positive.

We are given , TC = 50 + 10q + 2q2 Since the firm sells it's product in a perfectly competitive market where other firms charge a price of $90 , Price = $90 We know , Total Revenue = Price * Quantity Total Revenue = 90 q We know , Profit = Total Revenue - Total Cost Profit = 90q - 50 - 10q - 2q2 Profit = 80q - 2q2 - 50 TR = 90q MR = dMRdQ MR = 90 TC = 50 + 10q + 2q2 MC = dTCdQ MC = 10+ 4q We know that the profit is maximized at a point where , MR=MC 90 = 10 + 4q q = 20 (a.) The firm should produce 20 units in the short run. (b.) The firm should charge $90 per unit in the short run.(c.) Profit = 80q - 2q2 - 50 Now putting q = 20 Profit = 80(20) - 2(20)2 - 50 Profit = 1600 - 800 - 50 Profit = $750

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Economics

A firm sells its product in a perfectly competitive market where other firms charge a price of $90 per unit. The firm's total costs are C(Q) = 50 + 10Q + 2Q². Instructions: Round up your answers to no decimals. a. How much output should the firm produce in the short run? Q = b. What price should the firm charge in the short run? P = $ c. What are the firm's short-run profits? Profits = $

A firm sells its product in a perfectly competitive market where other firms charge a price of $90 per unit. The firm's total costs are C(Q) = 50 + 10Q + 2Q². Instructions: Round up your answers to no decimals. a. How much output should the firm produce in the short run? Q = b. What price should the firm charge in the short run? P = $ c. What are the firm's short-run profits? Profits = $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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