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Question on minimum price to generate positive output

The manager of watch creating firm operating into competitive market. Cost of production is denoted through C = 100 + Q2, Here Q mention the level of output and C is net cost. (The marginal cost of production is denoted as 2Q. The fixed cost of production is $100.) At what minimum price will the firm generate positive output?

A firm will generate in the short run if the revenues it receives are greater than its variable costs. Remember that the firm's short-run supply curve is its marginal cost curve above the minimum of average variable cost. Here, average variable cost is VC/Q =Q2/Q= Q. Also, MC is equivalent to 2Q. So, MC is greater than AVC for any quantity greater than 0. It means that the firm generates in the short run so long as price is positive.

 

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