Consider the following cost curve for a firm in a competitive industry where the market price equals $150. C = one third q cubed plus 6 q plus 1 comma 500. What is the firm's marginal cost (MC) ? MC = q squared plus 6. (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E. g., a superscript can be created with the ^ character.) At what level of output does the firm maximize profits (minimize losses) ?

Question

Business

Lane Galloway

29 May, 04:12

Consider the following cost curve for a firm in a competitive industry where the market price equals $150. C = one third q cubed plus 6 q plus 1 comma 500. What is the firm's marginal cost (MC) ? MC = q squared plus 6. (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E. g., a superscript can be created with the ^ character.) At what level of output does the firm maximize profits (minimize losses) ?

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Allie · Answer 1

-$348

Explanation:

As per the data given in the question,

Marginal cost (MC) = P rice

This equation equals in case of maximizing output

q^2 + 6 = 150

q^2 = 144

q = 12

In equilibrium condition the profit maximizing price and market price is similar, i. e. $150.

So, Total revenue obtained = P * Q

= $150 * 12

= $1,800

Total cost = 1 : 3 * 12^3 + 6 * 12 + 1,500

= $2,148

Profit = Total revenue obtained - Total cost

= $1,800 - $2,148

= - $348