A firm produces a certain good and has two plants. To produce units of the good in plant 1, the total cost for the firm is . To produce units of the good in plant 2, the total cost for the firm is .
Each unit of good produced by the firm is sold at price equal to 3. The profit level of the profit-maximizing firm is
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A firm produces a certain good and has two plants. To produce y₁ units of the good in plant 1, the total cost for the firm is c₁(y₁) = y₁ × y₁. To produce y₂ units of the good in plant 2, the total cost for the firm is c₂(y₂) = y₂ × y₂. Each unit of good produced by the firm is sold at price equal to 3. The profit level of the profit-maximizing firm is (A) 9 (B) 0 (C) The profit maximization problem does not have a solution (D) None of the above
Also written as: A firm produces a certain good and has two plants. To produce y_1 units of the good in plant 1, the total cost for the firm is c_1(y_1) = y_1 * y_1. To produce y_2 units of the good in plant 2, the total cost for the firm is c_2(y_2) = y_2 * y_2. Each unit of good produced by the firm is sold at price equal to 3. The profit level of the profit-maximizing firm is
Perfect competition has come up 115 times in 7 exams since 2006.
This question is on Profit maximisation and the competitive firm, part of Perfect competition in Microeconomics.
How a price-taking firm picks output where price equals marginal cost, and when it breaks even or shuts down.
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Question from the JNU SSS 2012 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.