Question
In: Economics
Hedge Hackers, LLC produces long lasting battery powered hedge trimmers and sells them in a perfectly...
Hedge Hackers, LLC produces long lasting battery powered hedge trimmers and sells them in a perfectly competitive market. The current market price for battery powered hedge trimmers is $225 per unit. Hedge Hackers’s total cost function for output per day is
C = 2Q^2 + 25Q + 4,800
- Determine the firm’s profit-maximizing output level from the information given.
- Write down the equation for the firm’s supply function (Q=F(P)). [Hint: Recall that to maximize profit, P = MC must be true at each profit maximizing level of output, where the seller doesn’t choose P. Also recall that the firm will shutdown if P < AVC.] What is the minimum price for which Hedge Hackers supply a positive level of output?
- New environmental protection regulation causes Hedge Hackers’s fixed costs to rise to $5,200 (from $4,800). Would this effect the firm’s output choice in the short run? Would it affect the firm’s short run supply curve? You must explain your reasoning.
- How will the new environmental protection regulation affect Hedge Hackers’s long run strategy?
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
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