Beta Industries Manufactures Floppy Disks That Consumers Perceive as Identical

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a.What are the firm's fixed costs?
b.What is the firm's marginal cost?
Now suppose other firms in the market sell the product at a price of $10.
c.How much should this firm charge for the product?
d.What is the optimal level of output to maximize profits?
How much profit will be earned?
f.In the long run, should this firm continue to operate or shut down? Why?
a.Fixed costs = 20.
b.Marginal costs = 4Q.
c.P = $10.
d.The firm should produce such that MC = P, i.4Q = 10.This implies that Q = 2.5 units.
Profits are ($10)(2.5) - 20 - 2(2.5)² = -$7.5.
f.Since the firm is earning losses, in the long-run it will shut down if the market conditions do not change.

Beta Industries Manufactures Floppy Disks That Consumers Perceive as Identical

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Beta Industries Manufactures Floppy Disks That Consumers Perceive as Identical

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