Consider a perfectly competitive market in which each firm's short-run total cost function is c = 64 + 15q + q2, where q is the number of units of output produced. the associated marginal cost curve is mc = 15 + 2q. in the short run each firm is willing to supply a positive amount of output at any price above . (enter your response as a real number rounded to two decimal places.) if the market price is $22, each firm will produce 3.5 units in the short-run. (enter your response as a real number rounded to one decimal place.) each firm earns a profit of . (enter your response as a real number rounded to two decimal places, and use a negative sign if the firm has a loss rather than a profit.)

Consider the following explanation.

Explanation:

A firm will supply goods in the market as long as its Marginal costs are above the minimum of AVC curev (shut down point)

Here,

VC= 15q+q^2

AVC = VC/q = 15+q

Also, MC = 15+2q. So,

This means that for any output value of Q, MC is more than AVC . This will tell us that as long as the ouput is positive and the price is positive the firm will supply in the market.

This means that the firm produces in the short run as long as price is positive.

To find minimum of AVC

AVC=MC

15+q= 15+2q

or

q=0

Now AVC at q=0

15+0=15

than ay outpu will be supplied for more than or equal to $15

For market price =22

The equilibrium will be

MC=P

15+2q = 22

2q=7

q=3.5 units

The profts (at price 22 and q=3.5) will be =TR-TC

=p*q- (64+15q+q^2)

=22*3.5-(64+15*3.5+3.5^2)

=77-128.75

=-51.75 (it is a case of loss)

All figures are in $.

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