You are the manager of a firm that produces a product according to the cost func

Question

You are the manager of a firm that produces a product according to the cost function C(qi) = 160 + 58qi – 6qi2 + qi3. Determine the short-run supply function if:

a. You operate a perfectly competitive business.

b. You operate a monopoly.

c. You operate a monopolistically competitive business.

P = 40 - 8q + 2q^2 if P is greater than or equal to $55; otherwise the firm produces zero units. There is no supply curve in this case. P = 58 - 12q + 3q^2 if P is greater than or equal to $49; otherwise the firm produces zero units. P = 35 - 15q + 3q^2 if P is greater than or equal to $52; otherwise the firm produces zero units.

Explanation / Answer

MC = dC/dQ = 3q^2 - 12q + 58

VC = 58qi – 6qi^2 + qi^3

AVC = VC/qi = qi^2-6qi+58 The roots of this equation are not rational

so There is no supply curve in all the three cases.

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