Answer to Question #85685 in Microeconomics for Taylor Sudduth

Question #85685
If the competitive market is $60, total cost= 3q^2-18q+182 & Marginal cost=6q-18. A. Solve for the profit-maximizing (or loss minimizing) quantity (q*) B. What is the Market equilibrium price? C. Should the competitive firm produce q*? Explain why using one of the four key questions and solutions. D. Does the competitive firm make a profit? Explain why using one of the four key questions and solutions. E. How much profit (or loss) does the competitive firm make? 1 Expert's answer 2019-03-04T11:47:01-0500 P =$60, TC = 3q2 - 18q + 182, MC = 6q - 18.

A. The profit-maximizing (or loss minimizing) quantity (q*) is at P = MR = MC, so:

6q - 18 = 60,

6q = 78,

q = 13.

B. The Market equilibrium price is P = MR = $60. C. The competitive firm should produce q*, if P > AVC. AVC = VC/q = 3q - 18 = 21, 60 > 21, so the firm should produce. D. The competitive firm will make a profit, if P > ATC. ATC = TC/q = 3*13 - 18 + 182/13 = 35, 60 > 35, so the firm will make a profit. E. The profit of the competitive firm is: TP = TR - TC = 60*13 - (3*13^2 - 18*13 + 182) =$325.

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