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Homework answers / question archive / The questions in this section refer to a competitive firm that has the cost function c(q) = q2 + 10q + 100
The questions in this section refer to a competitive firm that has the cost function c(q) = q2 + 10q + 100.
At an output of q = 5, the firm's total variable cost is ,its average cost is and its average fixed cost is In the short run, the minimum price above which this firm would supply a positive output is In the short run if the price is p = 20, the firm supplies an output of and its profit is
Cost function is C = q2 + 10q + 100
variable cost is q2 + 10q and fixed cost is 100
AVC is VC/q = q + 10 and ATC is C/q = q + 10 + 100/q
MC is 2q + 10
1) At q = 5, VC = 5^2 + 10*5 = 75
AC = 5 + 10 + 100/5 = 35
AFC = FC/q = 100/5 = 20
2) Minimum price is minimum AVC which is 10
3) At P = 20 MC = P gives 2q = 20 - 10 or q = 10/2 = 5 units
Firm supplies 5 units
Profit = revenue - cost
= 5*20 - (5^2 + 10*5 + 100)
= -75
