A price-taking firm's variable cost function is C = Q³,where Q is the output per week.It has a sunk fixed cost of $2,000 per week.Its marginal cost is MC = 3Q².What is the profit-maximizing output if the price is P = $192? A) 0 B) 6 C) 8 D) 10

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Quizplus · Accepted Answer

To maximize profit, the firm should produce where marginal cost (MC) equals the given price (P). Equating MC and P, we get: 3Q² = 192 Q² = 64 We can substitute the cost function into this equation: Q(3U1P12S1) = 64/(1,000 + 2P0) Q = [64/(1,000 + 2P0)]/(3U1P12S1) At P = $192, this gives us: Q = [64/(1,000 + 2P0)]/(3U1(192)12S1) Q = [64/(1,000 + 384)]/(3U1(2)12S1) Q = 8 Therefore, the profit-maximizing output is 8.

A Price-Taking Firm's Variable Cost Function Is C = Q3,where

A Price-Taking Firm's Variable Cost Function Is C = Q³,where