Question

It is known that the company has a cost function ?? = 2?^3
3 - 15?^2
2 + 60? and the company is
price takers on the market. Given the market demand function ? = 22 - 2? and the supply function
market ? = 2 + 2?.
A. Determine market prices in perfect competition.
b. Prove that the price at 3.a company produces at the lowest average price.
c. Use charts, illustrate what happens in the market if at the initial price 15.
What happens in the long run (consider constant costs)

the function is TC = 2Q^3 - 15Q^2 + 60Q

Answer 1

A) Market prices is in perfect competition so market price C = 2Q*3 +3-150*2=2Q3+240

q=238 units

Market price is the economic price for which a good or service is offered in the marketplace. It is of interest mainly in the study of microeconomics.Market price is for a particular time but normal price is for a period of time. Market price is the price prevailing on a particular day or a particular time. It is the result of market demand and supply. Normal price, on the other hand, is the result of long period demand and long period supply.

B) A company produces the average lower price and it maintains the proper market price for all the products available in the market .

In the broadest sense, an item's market price lies at the point of intersection between the available supply of the good or service and market demand for it. Any shift in the supply or demand affects an item's market price. If demand is held constant, a decline in supply results in a rise in its market price and vice versa. Likewise, if supply is held constant, a rise in the demand for an item results in a rise in its market price and vice versa.

C) TC=2Q*3-15Q*2+60Q =150*2+60*240=300+14400= rS 14700

constant-cost industry. An industry in which the ratio comparing units produced to production cost per unit remains the same regardless of industry volume or demand growth. This supply-curve equilibrium occurs when input costs do not increase in response to increased demand.