HW chap 9

# Thereforethefirmssupplyfunctionis qp90 5 forp 0

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Unformatted text preview: ion would increase profits if Marlboro sales increased by more than 71.43 percent. 11. awar d: 5 out of 5.00 points A price­taking firm's variable cost function is where Q is its output per week. It has a sunk fixed cost of \$384 per week. Its marginal cost is a. What is the firm’s supply function when the \$384 fixed cost is sunk? Instructions: Enter your answer as a whole number. Q = (P/9)0 .5 for P ≥ \$0 e z to.mhe c loud.mc gr a w- hill.c om/hm.tpx? todo= pr intvie w . 9/14 1/15/14 Assignme nt Pr int Vie w b. What is the firm’s supply function when the fixed cost is avoidable? Instructions: Enter your answer as a whole number. Q = (P/9)0 .5 for P ≥ \$144 . rev is ed jrl 08­11­2011 rev: 18_11_2013_QC_40348 Section: Supply Decisions by Price­Taking Firms Worksheet A price­taking firm's variable cost function is where Q is its output per week. It has a sunk fixed cost of \$384 per week. Its marginal cost is a. What is the firm’s supply function when the \$384 fixed cost is sunk? Instructions: Enter your answer as a whole number. Q = (P/9)0 .5 for P ≥ \$ 0. b. What is the firm’s supply function when the fixed cost is avoidable? Instructions: Enter your answer as a whole number. Q = (P/9)0 .5 for P ≥ \$ 144 . rev is ed jrl 08­11­2011 rev: 18_11_2013_QC_40348 Explanation: A firm is a price taker when it can sell as much as it wants at some given price P, but nothing at any higher price. The supply function of a price­taking firm tells us how much the firm wants to sell at each possible price, P. It is a function of the form: Quantity Supplied = S(Price). The supply function coincides with the firm's marginal cost curve at prices above the lowest level of average cost and involves zero supply at prices below the minimum average cost. To fi...
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