Exercise 3: A perfect competition firm has a demand equaltion of P=8 ($) and total cost equation of TC=Q²+ 2Q+ 4 ($) 1. Identify TR and MR equation? 2. Identify MC, VC, AVC, AFC, ATC equation? 3. What is optimal output level (Q) that gives the firm profit maximization? What is the maximum profit?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Exercise 3:
A perfect competition firm has a demand equaltion of P=8 ($) and total
cost equation of TC= Q²+ 2Q+ 4 ($)
1. Identify TR and MR equation?
2. Identify MC, VC, AVC, AFC, ATC equation?
3. What is optimal output level (Q*) that gives the firm profit
maximization? What is the maximum profit ?
4. What is break even price and break even quantity?
5. If market price decrease to P= 4$, should the firm continue the
production? Why?
Transcribed Image Text:Exercise 3: A perfect competition firm has a demand equaltion of P=8 ($) and total cost equation of TC= Q²+ 2Q+ 4 ($) 1. Identify TR and MR equation? 2. Identify MC, VC, AVC, AFC, ATC equation? 3. What is optimal output level (Q*) that gives the firm profit maximization? What is the maximum profit ? 4. What is break even price and break even quantity? 5. If market price decrease to P= 4$, should the firm continue the production? Why?
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