In a certain industry, the supply curve of any firm is S_i(p)= p/2.If a firm produces 6 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 6 units, the price p = 2 * 6 = 12. The total variable cost is the area under the supply curve up to the quantity produced, which is 6 units. This is calculated as (1/2) * base * height = (1/2) * 6 * 12 = 36.

In a Certain Industry, the Supply Curve of Any Firm