A competitive, price-taking firm has a total cost function given by TC(q) = 100 + 20q - q², where q is the quantity of output. A student correctly calculates the marginal cost as MC(q) = 20 - 2q. The student then concludes that the firm's supply function can be derived by setting the market price (P) equal to this marginal cost function. This conclusion is correct.
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A competitive, price-taking firm has a total cost function given by TC(q) = 100 + 20q - q², where q is the quantity of output. A student correctly calculates the marginal cost as MC(q) = 20 - 2q. The student then concludes that the firm's supply function can be derived by setting the market price (P) equal to this marginal cost function. This conclusion is correct.
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