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Homework answers / question archive / Suppose that a firm in a perfectly competitive industry has the following marginal cost curve: MC = 2Q + 6
Suppose that a firm in a perfectly competitive industry has the following marginal cost curve: MC = 2Q + 6. If the market price for the good they produce is $34.05, how many units of this good will the firm produce? Round your answer to two decimal places.
Answer:14.03
Firms increase output until marginal cost equals marginal revenue. In this case since the firm exists in a perfectly competitive market, marginal revenue is flat at the market price which is 34.05. Thus, we just set marginal cost to 34.05 and solve for Q as shown below:
34.05=2Q+6
Q=14.03
