The los angeles retail market for unleaded gasoline is, Ask an Expert

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The Los Angeles retail market for unleaded gasoline is fiercely price competitive. Consider the situation faced by a typical gasoline retailer when the local market price for unleaded gasoline is $2.50 per gallon and total cost (TC) and marginal cost (MC) relations are: TC = $156,250 + $2.25Q + $0.0000001Q2 MC = ?TC/?Q = $2.25 + $0.0000002Q and Q is gallons of gasoline. Total costs include a normal profit. A. Using the firm's marginal cost curve, calculate the profit-maximizing long-run supply from a typical retailer B. Calculate the average total cost curve for a typical gasoline retailer, and verify that average total costs are less than price at the optimal activity level.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91827592

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