Answered: A. Find equations for the firm’s fixed…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 1MC

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Question

Suppose a perfect competitive firm’s total cost curve and marginal cost curve are

TC= Q2+ 4Q+100

Also suppose that the market equilibrium price is given as $20.

A. Find equations for the firm’s fixed cost (FC), variable cost (VC), average total cost (ATC),

average variable cost (AVC) and Marginal cost (MC).

B. Find the output level that minimizes average total cost (ATC).

C. Calculate the price below which a firm in the market will not produce any output (the shutdown price).

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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