Firm in Perfect Competition
A firm in a perfectly competitive market has the following total cost function: STC = 20 + 6Q - 1.12Q 2 + 0.09Q3, where Q is the firm's output (in 000s). Market price is $7.
a. Write the expression (in terms of Q) for marginal cost (MC).
MC= 1 (6) Q0 - 2 (1.12) Q1 + 3 (0.09) Q2
MC= 6 - 2.24 Q + 0.27 Q2
b. What level of production (quantity) will the firm choose to maximize profit?
c. Enter a formula to calculate the firm's average total cost at the profit-maximizing quantity.
d. Using answers from above, enter a formula to calculate the firm's profit (in 000s).