A competitive firm’s cost of producing q units of output is C = 20 + 4q + q2. Its corresponding marginal cost is MC = 2q + 4. a. The firm faces a market price p = $30. Create a spreadsheet with q = 0, 1, 2, . . ., 15, where the columns are q, R, C, VC, AVC, MC, and profit. Determine the profit-maximizing output for the firm and the corresponding profit. Should the firm produce this level of output or should it shut down? Explain. b. Suppose the competitive price declines to p = $12. Repeat the calculations of part a. Should the firm shut down?
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A competitive firm’s cost of producing q units of output is C = 20 + 4q + q2. Its corresponding marg...
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