hw6soln

hw6soln - PADP 6950 Fertig Homework 6 Solutions 1 Suppose...

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Unformatted text preview: PADP 6950 Fertig Homework 6 Solutions 1. Suppose the total cost of producing widgets can be described by Y=10X2+100X+500 where Y is the total costs per year and X is the number of widgets. a. Draw the marginal cost curve, the average total cost curve, and the average variable cost curve. ATC = Y/X = 10X+100+500/X AVC = TC/X = 10X+100 X 0 1 2 3 4 5 MC 6 ATC 7 AVC 8 9 10 11 12 13 14 15 16 Y 500 610 740 890 1060 1250 1460 1690 1940 2210 2500 2810 3140 3490 3860 4250 4660 MC -110 130 150 170 190 210 230 250 270 290 310 330 350 370 390 410 ATC Inf. 610 370 296.7 265 250 243.3 241.4 242.5 245.6 250 255.5 261.7 268.5 275.7 283.3 291.3 Fall 2011 UGA 700 600 500 400 300 200 100 0 0 5 10 15 20 AVC 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 b. In a competitive market place, how much would the firm produce and what would be its level of profit if price were equal to \$300? When P=300, MC is about 300 when X=10. Profit = (P-ATC)Q = (300 250)*10 = 500 = profit c. What is the lowest price at which the firm is willing to produce in the long run? Lowest price is min ATC, which is about 242. ...
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