5. A firm produces a product in a competitive industry and has a total cost of function TC=50+4q+2q². The market price of the firm's product is $20. a. Find the profit maximizing output level. b. Calculate the value of total fixed cost (TFC) and total variable cost (TVC) for maximizing output level. (Hint: you find the output q in question (a) and put this q into the costs). c. What is the firm's profit? d. What is the firm's producer surplus? e. Should this firm continue to operate or shut down? f. Show the average variable cost, average total cost, marginal cost, marginal revenu, and demand curves on the graph.

5. A firm produces a product in a competitive industry and has a total cost of function TC=50+4q+2q². The market price of the firm's product is $20. a. Find the profit maximizing output level. b. Calculate the value of total fixed cost (TFC) and total variable cost (TVC) for maximizing output level. (Hint: you find the output q in question (a) and put this q into the costs). c. What is the firm's profit? d. What is the firm's producer surplus? e. Should this firm continue to operate or shut down? f. Show the average variable cost, average total cost, marginal cost, marginal revenu, and demand curves on the graph.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section12.3: The Various Measures Of Cost

Problem 3QQ

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