Market demand is given as Q_D= 300 - 5P.Market supply is given as Q_S= 5P.Each identical firm has MC = 6Q and ATC = 4Q.What is a firm's profit

Question

Quizplus · Accepted Answer

To find the equilibrium price, we can set QS1U1B1D equal to QS1U1B1S:

300 - 5P = 5P

Solving for P, we get P = $30.

Now, we need to find the quantity that each firm produces.

Since each firm's MC = 6Q and the market price is $30, we can set MC equal to P to find the firm's quantity:

6Q = 30

Q = 5

Therefore, each firm produces 5 units, and the total quantity in the market is:

QS1U1B1D = 300 - 5($30) = 150 units

Each firm's total cost is:

ATC = 4Q = 4(5) = $20

Therefore, each firm's profit is:

π = TR - TC = P*Q - ATC*Q = $30*5 - $20*5 = $50

So the best choice is B) $50, which represents the firm's profit under the given market conditions.

Market Demand Is Given as QD = 300 - 5P