Answered: A. Identify the market structure the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Rosebud Private Limited produces cooking oil and has many competitors producing close substitutes products. The firm has the following revenue and cost functions.

TR = 15Q – 0.3Q²

TC = 8Q + 0.02Q²

Where Q is output and price is in $.

A. Identify the market structure the firm is operating in. Explain your choice.

B. Determine the output that maximizes total revenue.

C. Using marginal approach, determine the output and price that maximizes profit.

(Hint: TR=P.Q)

D. Determine the profit/loss of the firm.

E. Based on approach in (c), illustrate using completely label diagram for situation that you obtain in (d).

F. Is the firm operating in the short run or long run? Give your reason

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