# 2.5 — Short Run Profit Maximization — Practice Problems

A firm has short-run costs given by: \begin{align*} C(q)&=q^2+1\\ MC(q)&=2q\\ \end{align*}

## 1.

Write an equation for fixed costs, $$f$$.

## 2.

Write an equation for variable costs, $$VC(q)$$.

## 3.

Write an equation for average fixed costs, $$AFC(q)$$.

## 4.

Write an equation for average variable costs, $$AVC(q)$$.

## 5.

Write an equation for average (total) costs, $$AC(q)$$.

## 6.

Suppose the firm is in a competitive market, and the current market price is \$4, how many units of output maximize profits?

## 7.

How much profit will this firm earn?

## 8.

At what market price would the firm break even $$(\pi=0)$$?

## 9.

Below what market price would the firm shut down in the short run if it were earning losses?

## 10.

Write out the firm’s short run supply function.