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    Profit Maximizing firm in Competitive industry

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    A firm produces a product in a competitive industry and has a total cost function C = 50 + 4q + 2q(squared) and a marginal cost function MC = 4 + 4q. At the given market price of $20, the firm is producing 5 units of output. Is the firm maximizing its profit? What quantity of output should the firm produce in the long run?

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    Solution Preview

    For profit maximization marginal revenue= Marginal cost
    Marginal revenue= $20
    Marginal Cost= 4+ 4q

    For profit ...

    Solution Summary

    The solution calculates the quantity of output the firm should produce in the long run.