Question

A perfectly competitive producer has the following short-run average cost curve and marginal cost curve: AC = 2Q + 3, MC = 4Q + 3, where costs are measured in dollars and Q represents the firm's output in units. If the market price is $15, the profit-maximizing producer should produce _______ units of output.a. 6b. 3c. zerod. 15

Answer 1

option (b) 3

Step-by-step explanation:

Data provided in the question:

AC = 2Q + 3,

MC = 4Q + 3

Here,

Q represents the firm's output in units

and costs are measured in dollars

Market price = $15

Now,

At the condition of profit-maximizing

Market price = MC

or

⇒ $15 = 4Q + 3

or

⇒ $15 - $3 = 4Q

or

⇒ 4Q = $12

or

⇒ Q = 3 units

Hence,

The answer is option (b) 3