Essay
Suppose that lots of companies make widgets. Tim's is a representative competitive firm in this industry and has TC = 10q2 + 5q + 40.
i)At what market price will Tim's break even?
ii)What is the shut down price for Tim's?
iii)What is the equation for Tim's short- run supply curve?
iv)Suppose that demand for widgets is P = 95 - Q. If there are a total of 30 widgets traded in the market, how many widgets will Tim's make and how many firms are competing against Tim's?
v)Will there be entry or exit in the widget industry, why?
Correct Answer:
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i)ATC = 10q + 5 + 40/q and MC = 20q + 5....View Answer
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