A firm sells in a competitive market in which price is $10. Its marginal cost is 2 + 0.5Q. Determine the profit-maximizing level of output.

What will be an ideal response?


The solution requires equating P = MC to determine Q:P = 10 = MC = 2 + 0.5Q10 = 2 + 0.5Q8 = 0.5QQ = 16

Economics

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Economics