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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Perfect Competition: Definition, Characteristics & Examples
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Chapter 3 / Lesson 62
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Learn the definition, characteristics, and benefits of perfect competition. Review real-life examples of perfect competition between different companies.
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