Author Question: A perfectly competitive firm has total revenue and total cost curves given by: TR = 100Q TC = ... (Read 94 times)

frankwu · **on:** Jul 1, 2018

A perfectly competitive firm has total revenue and total cost curves given by:

TR = 100Q
TC = 5,000 + 2Q + 0.2 Q2

a. Find the profit-maximizing output for this firm.
b. What profit does the firm make?

Question 2

Which of the following examples best illustrates the concept of derived demand?

A) An increase in the price of beef results in an increase in the demand for fish.
B) The higher the demand for automobiles, the greater the demand for steel.
C) The demand for Pepsi varies directly with the price of Coke.
D) The demand for a good varies inversely with its price.

memslove · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

a. MR = 100
MC = 2 + .4Q
100 = 2 + .4Q
Q = 245
b. Profit = 100 245 - 5,000 - 2(245 ) - 0.2 (245 )2 = 7,005

Answer to Question 2

B