You are a manager in a perfectly competitive market.The price in your market is $14.Your total cost curve is C(Q)= 10 + 4Q + 0.5Q².What price should you charge in the short run? A) $12 B) $14 C) $16 D) $18

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Quizplus · Accepted Answer

In a perfectly competitive market, the firm maximizes profit by setting the price equal to marginal cost in the short run. The marginal cost is the derivative of the total cost function, MC(Q) = 4 + 0.5Q². Setting MC(Q) = $14, we get: 4 + 0.5Q² = 14 0.5Q² = 10 Q² = 20 Therefore, the firm should produce a quantity of 20 units and charge a price of $14. Option B is the correct choice.

You Are a Manager in a Perfectly Competitive Market