Is this activity level sustainable in the long run?

s Salon is a popularly-priced hair cutter on the south side of Chicago. Given the large number Show more Megans Salon is a popularly-priced hair cutter on the south side of Chicago. Given the large number of competitors the fact that barbers routinely tailor services to meet customer needs and the lack of entry barriers it is reasonable to assume that the market is perfectly competitive and that the average $15 price equals marginal revenue P = MR = $15. Furthermore assume that the salons monthly operating expenses are typical of the 50 salons in the local market and can be expressed by the following total and marginal cost functions: TC = $7812.50 + $2.5Q + $0.005Q2 MC = TC/Q = $2.5 + $0.01Q where TC is total cost per month including capital costs MC is marginal cost and Q is the number of hair cuts provided. Total costs include a normal profit. A. Calculate Megans profit-maximizing output level. B. Calculate the Megans economic profits at this activity level. Is this activity level sustainable in the long run? Show less

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