Short Run Cost
Brucely Brothers’ short-run cost curve is: C = 25q2/K+15K, where q is the number of outputs produced and K is the number of robot hours they hire. Currently, they hire 10 robot hours per period. The short-run marginal cost curve is: MC = 50q/K.
(i) If Brucely Brothers receive $30 for every unit of output they produce, what is their profit maximizing output level? Show your work.
(ii) Calculate their profits. Should they shut down in the short-run? Explain why.
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