In a certain industry, the supply curve of any firm is S_i(p)= p/2.If a firm produces 5 units of output, what are its total variable costs?

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Quizplus · Accepted Answer

The supply curve is given as a function of price (p), but it seems there's a formatting error. Assuming a linear relationship where quantity supplied (Q) is proportional to price (p), such as Q = p/2, and given that the firm produces 5 units, we can reverse the equation to find p = 2*Q = 2*5 = $10. Total variable costs (TVC) for producing 5 units would then be 5 units * $10/unit = $50. However, since the question asks for total variable costs and the supply curve typically represents marginal cost (MC) at each quantity, and given the formatting error, the correct interpretation is challenging. Assuming a direct interpretation isn't feasible due to the formatting error, but if we consider the supply function as indicative of cost per unit, and the firm produces 5 units at a cost that would normally be associated with the price they'd sell it for, we might infer the cost directly from the quantity. Without a clear formula, we default to the information provided about output and costs, which seems insufficient for a direct calculation. Thus, the answer hinges on interpreting the given formula correctly, which is challenging due to formatting. However, assuming a simple cost structure where the cost per unit is directly proportional to the output, and given the lack of clarity, the most straightforward interpretation might lead to a calculation error. The correct approach would involve clarifying the supply curve equation and its relation to costs. Given the error in the question's formatting and assuming a standard interpretation isn't possible, the correct answer would be based on a standard cost calculation method if the equation were clear.

In a Certain Industry, the Supply Curve of Any Firm