In: Economics
A local microbrewery has total costs of production given by the equation C(Q) = 500 + 10Q + 5Q 2 . The market demand for beer is given by the equation Q = 105 – (1/2)P. The firm operates in a perfectly competitive market.
a. Write the equations showing the brewery's average total cost and average variable cost, average fixed cost, and marginal cost, each as a function of quantity (Q).
b. What is the break-even price and break-even quantity for this firm in the short run?
c. What is the shut-down price and shut-down quantity for this firm in the short run?
d. If the market price of the output is $50, how many units will this firm produce?
e. Given a market price of $50, how many firms are in this market?