ECON 3020 Questions and Answers (work shown)

1. If total cost is given by TC = 10Q −5Q²+ 0.1Q³, where Q is the level of output.

(1). Obtain the marginal cost function.

(2). What is the output level so the marginal cost is minimized?

(3). Obtain the average cost function.

(4). What is the output level so the average cost is minimized?

2. Trudeau’s Body Shop incurs total costs given by TC = 2,400 + 100Q. If the price it charges for a paint job is $120, what is its break- even level of output?

3.A representative firm with short- run total cost given by TC = 20 + 20q + 5q² operates in a competitive industry where the short- run market demand and supply curves are given by Q_D= 1,400 −40P and Q_S= −400 +20P. 

(1). If the firm is perfectly competitive, what is the optimum output rate?

(2). At this output rate, what is the profit?

4.If a representative firm with long-run total cost given by TC = 400 + 45Q - 8Q2 + 0.7Q3 operates in a competitive industry, at what price level, will this firm shutdown in the short run?