Hypothetical perfectly competitive market

Question

The supply and demand equations for a hypothetical perfectly competitive market are given by Q_S = -100 + 3P and QD = 500 - 2P.

1) Determine the  firm’s optimal (i.e. profit maximizing level of output) and its profit or loss.

2) Graph the MR and MC curves and  use the graph to find the output at which the two curves intersect. (**The graph must be used to provide the answer to the question.

   Total Fixed   Total Variable

Output     cost      cost     

0         $100           $   0             

1           100            100                   

2           100            180                   

3           100             240                   

4           100             320                   

5           100            440                   

6           100             600                   

7           100             800                   

8           100           1040                   

9           100           1340                   

10          100           1800