Suppose a firm's costs are F + v ∗ q² where F and v are positive real numbers and the firm sells its product at the market determined price p.Profits are calculated using A) p ∗ q - F - v ∗ q². B) [p -(F/q + v ∗ q)] ∗ q. C) [(p ∗ q)/q -(F + v ∗ q)/q] ∗ q. D) Both A and B.

Question

Quizplus · Accepted Answer

Option A is the standard formula for calculating profits, where total revenue (p*q) is subtracted from total costs (F + v*q²). Option B is a rearrangement of the same formula, where total revenue is subtracted from the sum of fixed and variable costs per unit (F/q + v*q). Therefore, both A and B are valid choices for the formula to calculate profits.

Suppose a Firm's Costs Are F + V ∗ Q2

Suppose a Firm's Costs Are F + V ∗ Q²