A Competitive Firm Has a Long-Run Total Cost Function C(y)=

question 17

Multiple Choice

A competitive firm has a long-run total cost function c(y) = 3y2 + 675 for y > 0 and c(0) = 0.Its long-run supply function is described as

• A)y = p/6 if p > 90, y = 0 if p < 90.
• B)y = p/3 if p > 88, y = 0 if p < 88.
• C)y =p/3 if p > 93, y = 0 if p < 99.
• D)y =p/6 if p > 93, y = 0 if p < 93.
• E)y =p/3 if p > 95, y = 0 if p < 85.

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Definitions:

Incremental Cash Flow

The extra cash flow from operations that a company gets by starting a new project.

Tax Rate

This represents the percentage at which an individual or corporation is taxed by the government.

Straight-Line Depreciation

Straight-line depreciation is a method of allocating the cost of a tangible asset over its useful life in equal annual installments.

Tax Shield

A reduction in taxable income for individuals or corporations achieved through claiming allowable deductions.