A firm has the long-run cost function C(Q) = 4Q2 + 196.In the long run, it will supply a positive amount of output, so long as the price is greater than

A) $120.
B) $112.
C) $56.
D) $28.
E) $61.

Question

A firm has the long-run cost function C(Q) = 4Q2 + 196.In the long run, it will supply a positive amount of output, so long as the price is greater thanA) $120.B) $112.C) $56.D) $28.E) $61.

Akhil Pillai · Accepted Answer

Final Answer : C, Explanation :  In the long run, a firm will supply a positive amount of output if the price is greater than the minimum average cost. The average cost (AC) is given by AC(Q) = C(Q)/Q = 4Q + 196/Q. To find the minimum AC, take the derivative of AC with respect to Q, set it to zero, and solve for Q. The minimum AC occurs at Q = 7, and the minimum average cost is 56. Thus, the price must be greater than $56.

A firm has the long-run cost function C(Q) = 4Q2 + 196.In the long run, it will supply a positive amount of output, so long as the price is greater than

A) $120.
B) $112.
C) $56.
D) $28.
E) $61.

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