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?

Question

Quizplus · Accepted Answer

The supply curve S_i(p) = p/2 implies that the price p is equal to 2 times the quantity supplied. If the firm produces 5 units, the price is 2 * 5 = $10. The total variable cost is the price times the quantity, so 5 * $10 = $50. However, the correct interpretation should consider the supply curve as the marginal cost curve, and the total variable cost is the area under the marginal cost curve up to the quantity produced. The marginal cost for each unit is p/2, so for 5 units, the total variable cost is (1/2)(5)(10) = $25.

The Supply Curve of Any Firm Is Si(p)= P/2

The Supply Curve of Any Firm Is S_i(p)= P/2