# Short and Long Run equilibrium price and output level

The Amber Corporation total cost function (where TC is the total cost in dollars and Q is quantity) is

TC = 200 + 4Q + 2Q^2

a. If this firm is perfectly competitive and the price of its product is $24, at what quantity will the firm choose to produce?

b. Does the answer represent a short-run equilibrium or a long-run equilibrium? Explain.

c. If the answer is for short-run equilibrium, calculate the long-run price and quantity for this firm.

https://brainmass.com/economics/general-equilibrium/short-long-run-equilibrium-price-output-level-235109

#### Solution Preview

Output Level

Solution:

a. If this firm is perfectly competitive and the price of its product is $24, at what quantity will the firm choose to produce?

TC=200+4Q+2Q^2

Marginal Cost=MC=4+4Q

In perfect competition, MC=Price

So, ...

#### Solution Summary

Solution describes the steps for calculating profit maximizing output of a perfectly competitive firm at prevailing market price. It also calculates short and long equilibrium price and quantity or the firm.