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3 August, 19:12

Suppose a farmer is a price taker for soybean sales with cost functions given by TC =.1q2 + 2q + 30 MC = 2q + 2 If P = 6, the profit-maximizing level of output is a. 10 b. 20 c. 40 d. 80

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  1. 3 August, 22:47
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    Option (b) 20

    Explanation:

    Data provided in the question:

    TC = 0.1q² + 2q + 30

    MC = 0.2q + 2

    P = 6

    Farmer is a price taker

    Now,

    Since, the farmer is the price taker.

    Therefore,

    the farmer is in perfectly competitive market.

    Thus,

    MC = MR = P

    or

    0.2q + 2 = 6

    or

    0.2q = 6 - 2

    or

    0.2q = 4

    or

    q = 20

    Hence,

    Option (b) 20
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