Question

A foodstuff firm has variable cost function: VC = 2q*(q+1). The foodstuff market is considered as perfect competition market with many firms that are doing business.

a. Find the short run supply curve of the firm?

b. The firm is break even at total revenue of $702. Calculate the firm’s price and output at this break-even point?

c. What is the firm’s fixed cost?

d. Calculate the price at which firm will shut-down its business?

Do other answer, if u just copy from other, i do not need it. All the answers you post for this problem is not enough and have some mistakes. It does not include units and some steps are wrong. So please do your best work, if not, please do not answer my problem, thanks!

Answer 1

A firm's short run supply curve in a perfectly competitive market is determined by where marginal cost equals price. The break-even point for the firm indicates a total revenue that equals total costs, and fixed costs can be derived from this information. The shut-down price is where the total revenue no longer covers variable costs.

Step-by-step explanation:

In a perfectly competitive market, firms are price takers, which means they have to accept the market price. To find a foodstuff firm's short run supply curve, we need to determine the point where the firm's marginal cost (MC) is equal to the price (P). Since the variable cost (VC) function is given by VC = 2q*(q+1), the marginal cost can be found by taking the derivative of the total cost function.

The firm's break-even point occurs when total revenue (TR) equals total cost (TC), meaning that profit is zero. With a total revenue of $702 and a perfect competition market, the price can be found by dividing the total revenue by the quantity at the break-even point.

The fixed cost (FC) can be calculated by subtracting variable cost from total cost at the break-even point. Finally, the shut-down price is the price at which the firm's total revenue is equal to its variable costs, indicating the point beneath which the firm would decide to stop production in order to minimize losses.

Answer 2

A firm in a perfectly competitive market has its short-run supply curve represented by its marginal cost curve above the average variable cost. Fixed costs are deduced by subtracting variable costs from total costs at the break-even output. The shutdown price is where total revenue fails to cover variable costs.

Step-by-step explanation:

Finding the Short-Run Supply Curve and Break-Even Point

To find the short-run supply curve of a firm in a perfectly competitive market, you need to determine the marginal cost (MC) of production, which is found by taking the derivative of the variable cost function. With VC = 2q*(q+1), the derivative MC = d(VC)/dq = d(2q*(q+1))/dq = 2 * (q + 1 + q(1)) = 4q + 2. The supply curve in the short run for a perfectly competitive firm is their MC curve above the average variable cost curve.

To calculate the firm's price and output at the break-even point where total revenue equals total costs, we use the given total revenue of $702. At the break-even point, TR = TC, implying 702 = P*q = (AVC + AFC) * q. However, we're missing the fixed costs and price, so we need more information to get the precise values of price and output. With only the given total revenue, we can't calculate these without making assumptions.

The firm's fixed cost (FC) is a key component in understanding the financials of a business and is deduced by subtracting the variable costs from the total costs at a certain level of output where the firm is breaking even.

Lastly, the shutdown price of the firm is determined by the price point at which the firm's total revenue is unable to cover its variable costs. This price corresponds with the minimum average variable cost (AVC).