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    Costs and price in a perfectly competitive firm

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    A perfectly competitive firm faces the following monthly costs and price.

    TC = 5,625 + 5Q + 0.01Q2

    ATC = 5 + + 0.01Q

    MC = 5 + 0.02Q

    P = 20.

    a. What is the fixed cost of this firm?

    b. What is the optimal output of this firm?

    c. What is the economic profit or loss of this firm?

    d. If there are 100 firms producing exactly the same amount like this firm, what will be the total monthly industry output?

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    Solution Preview

    Please see the attached file.

    Clarification on part c:

    c. What is the economic profit or loss of this firm? ...

    Solution Summary

    The expert examines the costs and prices in a perfectly competitive firm are assessed.

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