Question

(b) A firm in a perfect competitive market structure faces a marginal cost function given
by
MCQ) = 4Q + 5
where Q represents quantity of output produced. This firm earns marginal revenue of
Rs 25 on each unit sale of its output. Suppose this firm decides to produce 3 units of
output, is this a profit maximising decision by the firm? If not, how much should this
firm produce to earn maximum profits? In the long-run will this firm earn negative
economic profits, positive economic profits, or zero economic profits?​

Answer 1

Explanation:

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