If a typical firm has TC given by q²+ 5q + 25 and the price in the competitive market is 25, then: A)there will be entry as firms are making a loss. B)there will be exit as firm are making a loss. C)there will be entry as firms are making a profit. D)there will be exit as firms are making a profit.

Question

Quizplus · Accepted Answer

At P = 25, TR = 25q. So, profit = TR - TC = 25q - (q²+ 5q + 25) = 20q - 25. Since q > 0, profit > 0. So, there will be entry.

If a Typical Firm Has TC Given by Q2

If a Typical Firm Has TC Given by Q²