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A Firm Working in A Perfectly Competitive Market Has A Total Cost Function
A Firm Working in A Perfectly Competitive Market Has A Total Cost Function
A company that works in a perfectly competitive market has a total cost function:
Q 0 =5P-500 , Q d =4000-10P
a) Calculate what quantity you will produce to maximize profits and find the
profit.
b) Graphically represent the equilibrium of the market and the company.
Alone)
In perfect competition:
P=CMg………………(1)
Q0=Qd
5P-500 =4000-10P
P=300
Q1 =20, Q2 =4
2.4-24<0
EITHER
300
1000
To obtain the balance of the company we calculate the average variable cost
C'
CTMe
CVMe
300
CVme
250
20