A competitive firm has the short-run cost function c(y)  2y3  16y2  64y  50.The firm will produce a positive amount in the short run if and only if the price is greater than

A) $16.
B) $64.
C) $32.
D) $35.
E) $31.

Question

Noelle Tursky · Accepted Answer

Final Answer : C, Explanation :  To determine the firm's output level in the short run, we need to minimize the cost function with respect to y, which yields the following first-order condition:c'(y) = 6y^2 - 32y + 64 = 0Solving for y, we get y = 4, which is a positive output quantity.To determine the price at which the firm will produce in the short run, we need to compare the firm's marginal cost (MC) at the output level y = 4 with the price (P). If P > MC, the firm will produce; if P  < MC, the firm will shut down and produce nothing.The firm's MC at y = 4 is c'(4) = 48. Therefore, the firm will only produce if P > 48. The only answer choice that satisfies this condition is C, $32. Therefore, the correct answer is C.

A competitive firm has the short-run cost function c(y)  2y3  16y2  64y  50.The firm will produce a positive amount in the short run if and only if the price is greater than

A) $16.
B) $64.
C) $32.
D) $35.
E) $31.

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Learning Objectives

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A competitive firm has the short-run cost function c(y)  2y3  16y2  64y  50.The firm will produce a positive amount in the short run if and only if the price is greater thanA) $16.B) $64.C) $32.D) $35.E) $31.

Definitions

Learning Objectives

Learning Objectives

Related questions

A competitive firm has the short-run cost function c(y)  2y3  16y2  64y  50.The firm will produce a positive amount in the short run if and only if the price is greater than

A) $16.
B) $64.
C) $32.
D) $35.
E) $31.