A firm sells its product in a perfectly competitive market where other firms charge a price of $100 per unit. The firm's total costs are C(Q) = 60 + 12Q + 2Q^2.
a. How much output should the firm produce in the short run?
b. What price should the firm charge in the short run?
c. What are the firm's short-run profits?
Perfect competition is a market situation where the price of the good or service is beyond the control of the producers. Firms revenue maximize at the equilibrium quantity where price is equal to marginal cost.
Answer and Explanation: 1
a. The marginal cost is equal to the derivative of the total cost. In perfect competition the equilibrium is determined at the point where price is...
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fromChapter 3 / Lesson 62
Learn the definition, characteristics, and benefits of perfect competition. Review real-life examples of perfect competition between different companies.