Anonymous
Anonymous asked in Social ScienceEconomics · 3 weeks ago

Suppose Melody produces muffins in a perfectly competitive market. Her cost function is TC = (0.25)Q + (0.005)Q2 + 2  MC = 0.25 + 0.01Q?

1. Identify the minimum price at which she will produce.

2.If the industry has the same cost function as Melody’s business, what will be equilibrium price?

1 Answer

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  • Oiy
    Lv 4
    3 weeks ago

    She will produce at the price=MC. The lowest price is 0.25. Everyone is the price taker, so the equilibrium price is still at p=MC=0.25+0.01Q

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