Question

Consider a perfectly competitive market in which each​ firm's short-run total cost function is C​ = 25 ​+ 6q ​+ q2​, where q is the number of units of output produced. The associated marginal cost curve is MC​ = 6 ​+ 2q. In the short run each firm is willing to supply a positive amount of output at any price above ​$ nothing.

Answer 1

$6

Step-by-step explanation:

A firm will supply goods in the market as long as its Marginal costs are above the minimum of AVC curve (shut down point)

Here,

`VC=6q+q^(2)`

AVC = VC ÷ q

= 6 + q

Also, MC = 6 + 2q.

So,

This means that for any output value of Q, MC is more than AVC .

This will tell us that as long as the output is positive and the price is positive the firm will supply in the market.

This means that the firm produces in the short run as long as price is positive.

To find minimum of AVC

AVC = MC

6 + q = 6 + 2q

or

q = 0

Now AVC at q=0

6 + 0 = 6

then any output will be supplied for more than or equal to $6