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The effect of the law diminishing returns

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Reference no: EM13882803

Kelson Electronics a manufacturer of DVRs, estimates the following relation between its marginal cost of production and monthly output: MC=$150+0.005Q

A. What does this function imply about the effect of the law diminishing returns on Kelsons short-run cost functions?

B. Calculate the marginal cost of production at 1,500, 2,000 and 3,500 units of output.

C. Assume Kelson operates as a price taker in a competitive market. What is this firms profit -maximizing level of output if the market price is $175?

D. Compute Kelsons short-run supply curve for its product.

 

 

Reference no: EM13882803

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