# For the next two questions, use the following information. You are the manager of a firm that...

## Question:

For the next two questions, use the following information.

You are the manager of a firm that sells its product in a perfectly competitive market at a price of $50. Your firm's cost function is C = 40 + 5Q^2. (Therefore, it's marginal cost function is MC = 10Q.)

The profit-maximizing output for your firm is:

a. 0.8

b. 5

c. 10

d. 45

Your firm's maximum profits are:

a. 85

b. 100

c. 125

d. 250

## Perfect Competition:

Perfect competition is a market situation where there are so many well-informed consumers and producers, that there are essentially no possibilities for a monopoly to exist and the price of the good or service is beyond the control of the producers and consumers.

## Answer and Explanation: 1

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View this answer1. In perfect competition the market equilibrium is where P = MC. If the P = 50 and the MC = 10Q then

50 = 10Q

Q = 5

The answer is B. Quantity...

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Chapter 3 / Lesson 62Learn the definition, characteristics, and benefits of perfect competition. Review real-life examples of perfect competition between different companies.

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