Mr.O.Carr has the cost function c(y)  y2  100 if his output, y, is positive and c(0)  0.If the price of output is 25, Mr.Carr's profit-maximizing output is zero.

Question

Mr.O.Carr has the cost function c(y)   y2    100 if his output, y, is positive and c(0)   0.If the price of output is 25, Mr.Carr's profit-maximizing output is zero.

Domarion Hardman · Accepted Answer

Final Answer : False, Explanation :  To find the profit-maximizing output, we need to compare the price with the marginal cost (MC) at each level of output. The marginal cost is the derivative of the cost function, so we have:MC(y) = 2y + 100At an output level of y=0, the marginal cost is MC(0) = 100. Since the price is only 25, Mr. Carr will lose money by producing anything. Therefore, the profit-maximizing output is indeed zero, and the statement is true.

Mr.O.Carr has the cost function c(y) y2  100 if his output, y, is positive and c(0) 0.If the price of output is 25, Mr.Carr's profit-maximizing output is zero.

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