Joshua owns a small boat and catches lobster off the coast of Maine. His weekly cost function is TC(q) = 40 + 5q + 5q2. He sells his lobsters to the local wholesaler at the market price p %3D (in dollars). a) Find Joshua's short-run supply function for lobsters. (Hint: In this case short-run marginal cost is the same as long-run marginal cost.) b) Find Joshua's long-run supply function for lobsters. c) Find Joshua's shutdown price and Joshua's breakeven price (the price at which profit equals zero). d) Suppose the market price is $30, calculate his profit. What will Joshua do in the long run? Explain.

Joshua owns a small boat and catches lobster off the coast of Maine. His weekly cost function is TC(q) = 40 + 5q + 5q2. He sells his lobsters to the local wholesaler at the market price p %3D (in dollars). a) Find Joshua's short-run supply function for lobsters. (Hint: In this case short-run marginal cost is the same as long-run marginal cost.) b) Find Joshua's long-run supply function for lobsters. c) Find Joshua's shutdown price and Joshua's breakeven price (the price at which profit equals zero). d) Suppose the market price is $30, calculate his profit. What will Joshua do in the long run? Explain.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.4P

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