Q -1: For an individual firm in a perfectly competitive market, let its cost function be c(y) = 8y2 + 5y + 6. a) Determine the firm’s marginal cost, average total cost, average fixed cost, and average variable cost in terms of the market price, p. Answers should not be in terms of quantity y. b) What is the firm’s short-run shutdown condition? c) Find the firm’s short-run shutdown price ˆp. That is, if the market price falls below ˆp, the firm will shutdown.

Q -1: For an individual firm in a perfectly competitive market, let its cost function be c(y) = 8y2 + 5y + 6. a) Determine the firm’s marginal cost, average total cost, average fixed cost, and average variable cost in terms of the market price, p. Answers should not be in terms of quantity y. b) What is the firm’s short-run shutdown condition? c) Find the firm’s short-run shutdown price ˆp. That is, if the market price falls below ˆp, the firm will shutdown.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter22: Perfect Competition

Section22.2: Perfect Competition In The Short Run

Problem 2ST

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For an individual firm in a perfectly competitive market, the cost function is c(y) = 8y^2 + 5y + 6. a) Determine the firm's marginal cost, average total cost, average fixed cost, and average variable cost in terms of the market price, p. Answers should not be in terms of quantity, y. b) What is the firm's short-run shutdown condition? c) Find the firm's short-run shutdown price, p*. That is, if the market price falls below p*, the firm will shut down.
For an individual firm in a perfectly competitive market, let its cost function be c(y) = 8y² + 5y + 6. a) Determine the firm’s marginal cost, average total cost, average fixed cost, and average variable cost in terms of the market price, p. Answers should not be in terms of quantity y. b) What is the firm’s short-run shutdown condition? c) Find the firm’s short-run shutdown price pˆ. That is, if the market price falls below pˆ, the firm will shutdown.
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