You've researched and found that most firms in the market currently experience costs such that TC = 1,325 + 3800 - 6.7502 + 0.0703. Determine whether or not you should enter this market. Select one: Oa. Plugging the market equilibrium quantity into the firm total cost function results in huge costs for my company, so I should not enter until P > MC. b. Using the P= = MC rule, the equilibrium price is below ATC at the optimal quantity, so entering would result in a loss. I should not enter. O c. The optimal Q is set where AVC and ATC intersect which occurs far above the equilibrium price, so entering would result in profits and thus I should enter. O d. The total revenue at the equilibrium P is greater than the total costs, so it would be profitable to enter.
You've researched and found that most firms in the market currently experience costs such that TC = 1,325 + 3800 - 6.7502 + 0.0703. Determine whether or not you should enter this market. Select one: Oa. Plugging the market equilibrium quantity into the firm total cost function results in huge costs for my company, so I should not enter until P > MC. b. Using the P= = MC rule, the equilibrium price is below ATC at the optimal quantity, so entering would result in a loss. I should not enter. O c. The optimal Q is set where AVC and ATC intersect which occurs far above the equilibrium price, so entering would result in profits and thus I should enter. O d. The total revenue at the equilibrium P is greater than the total costs, so it would be profitable to enter.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:You've researched and found that most firms in the market currently experience
costs such that TC = 1,325 + 3800 - 6.7502 + 0.0703. Determine whether or
not you should enter this market.
Select one:
Oa. Plugging the market equilibrium quantity into the firm total cost function
results in huge costs for my company, so I should not enter until P > MC.
b. Using the P=
=
MC rule, the equilibrium price is below ATC at the optimal
quantity, so entering would result in a loss. I should not enter.
O c. The optimal Q is set where AVC and ATC intersect which occurs far
above the equilibrium price, so entering would result in profits and thus I
should enter.
O d. The total revenue at the equilibrium P is greater than the total costs, so it
would be profitable to enter.
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