Purchase Solution

Producers, consumers, and competitive markets

Not what you're looking for?

Ask Custom Question

Suppose that a competitive firm's marginal cost of producing output q is given by MC(q)=3+2q. Assume that the market price of the firm's product is $9.

a. What level of output will the firm produce?
b. What is the firm's producer surplus?
c. Suppose that the average variable cost of the firm is given by AVC(q)=3+q. Suppose that the firm's fixed costs are known to be $3. Will the firm be earning a positive, negative, or zero profit in the short run?

Purchase this Solution

Solution Summary

Producers, consumers, and competitive markets are exemplified.

Solution Preview

a. What level of output will the firm produce?
The first order condition for a competitive firm to maximize its profit is MC = P, i.e.:
3+2q = 9
solve for q =3
so the firm will ...

Purchase this Solution

Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.