Market demand is given as Q_D= 120 - 2P.Market supply is given as Q_S= 2P.Each identical firm has MC = 6Q and ATC = 3Q.What is a firm's profit

Question

Quizplus · Accepted Answer

At equilibrium, QD = QS, so 120 - 2P = 2P, solving gives P = 30. Substituting P = 30 into either QD or QS gives Q = 60. Each firm produces where MC = P, so 6Q = 30, giving Q = 5. Profit = (P - ATC) * Q = (30 - 3*5) * 5 = $48.

Market Demand Is Given as QD = 120 - 2P

Market Demand Is Given as Q_D= 120 - 2P