### How many pairs of shoes will the firm produce

##### Reference no: EM131174672

XYZ is a small leather shoes manufacturing company. The market for the brand of shoes produced by XYZ is highly competitive, currently selling for \$100 per pair. XYZ's total and marginal cost functions are as follows: C(Q) = 1,000,000 + 0.01Q2 MC = 0.02Q Where Q is number of pairs of shoes produced per year. a. How many pairs of shoes will the firm produce in order to maximize profit (minimize loss)? b. How much profit (loss) will the firm earn? c. Analyze the firm’s position in terms of the shutdown condition. Should XYZ operate or shut down in the short-run? (Hint: The company’s fixed and variable costs can be derived from the TC equation)

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