Supply Curve Analysis. Computers.com is a leading Internet retailer of high-performance desktop computers. Based on an analysis of monthly cost and output data, the company has estimated the following relation between its marginal cost of production and monthly output:

A. Calculate the marginal cost of production at 100,000, 200,000, and 300,000 units of output.
B. Express output as a function of marginal cost. Calculate the level of output at which MC = $1,000, $1,500 and $2,000.
C. Calculate the profit-maximizing level of output if prices are stable in the industry at $1,500 per unit and, therefore, P = MR = $1,500.
D. Again assuming prices are stable in the industry, derive the firm's supply curve. Express price as a function of quantity and quantity as a function of price.

Question

Supply Curve Analysis. Computers.com is a leading Internet retailer of high-performance desktop computers. Based on an analysis of monthly cost and output data, the company has estimated the following relation between its marginal cost of production and monthly output:
  
A. Calculate the marginal cost of production at 100,000, 200,000, and 300,000 units of output.
B. Express output as a function of marginal cost. Calculate the level of output at which MC = $1,000, $1,500 and $2,000.
C. Calculate the profit-maximizing level of output if prices are stable in the industry at $1,500 per unit and, therefore, P = MR = $1,500.
D. Again assuming prices are stable in the industry, derive the firm's supply curve. Express price as a function of quantity and quantity as a function of price.

Quizplus · Accepted Answer

The Answer of Supply Curve Analysis. Computers.com is a leading Internet retailer of high-performance desktop computers. Based on an analysis of monthly cost and output data, the company has estimated the following relation between its marginal cost of production and monthly output:
  
A. Calculate the marginal cost of production at 100,000, 200,000, and 300,000 units of output.
B. Express output as a function of marginal cost. Calculate the level of output at which MC = $1,000, $1,500 and $2,000.
C. Calculate the profit-maximizing level of output if prices are stable in the industry at $1,500 per unit and, therefore, P = MR = $1,500.
D. Again assuming prices are stable in the industry, derive the firm's supply curve. Express price as a function of quantity and quantity as a function of price.