Suppose a firm in a perfectly competitive industry has the short run cost function tc=100 + q2 with the corresponding marginal cost curve of mc=2q
1)if the market price is $30 what is the profit maximizing output level for each firm? What is the profit of the firm?
2) what would be the competitive equilibrium price in this industry?
For perfect competition, the profit max. rule is p=mc
1) p = 30 = 2q = MC, ...
The firms in competitive markets are examined. The competitive equilibrium price in the industry are given.