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 average total cost

Question

Quizplus · Accepted Answer

The firm's average total cost (ATC) is given as 4Q. To find the ATC, we need to determine the equilibrium quantity (Q) first. At equilibrium, QD = QS, so 300 - 5P = 5P, which gives P = 30. Substituting P = 30 into either QD or QS gives Q = 150. Therefore, ATC = 4Q = 4(150) = 600. However, since the question asks for the ATC per unit, we divide by Q, giving ATC = 600/150 = 4. The correct choice is C, which corresponds to $20.

Market Demand Is Given as QD = 300 - 5P

Market Demand Is Given as Q_D= 300 - 5P