Question

Consider the following cost curve for a firm in a competitive industry where the market price equals ​$150. C​ = one third q cubed plus 6 q plus 1 comma 500 . What is the​ firm's marginal cost​ (MC)? MC​ = q squared plus 6. ​(Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts.​ E.g., a superscript can be created with the​ ^ character.) At what level of output does the firm maximize profits​ (minimize losses)?

Answer 1

-$348

Explanation:

As per the data given in the question,

Marginal cost(MC) = P rice

This equation equals in case of maximizing output

q^2 + 6 = 150

q^2 = 144

q = 12

In equilibrium condition the profit maximizing price and market price is similar, i.e. $150.

So, Total revenue obtained = P × Q

= $150 × 12

= $1,800

Total cost = 1 ÷ 3 × 12^3 + 6 × 12 + 1,500

= $2,148

Profit = Total revenue obtained - Total cost

= $1,800 - $2,148

= -$348