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Q. A industry uses a single plant with costs C = 160 + 16Q + .1Q2 and faces cost equation P = 96 - .4Q.

a. Find out industry's profit-maximizing cost and quantity. Illustrate what is its profit?

b. industry's production manager claims that industry's average cost of production in minimized at an output of 40 units. Furthermore, she claims that 40 units is industry's profit maximizing level of output. Elucidate where these claims are correct.

c. Could industry increase its profit by utilizing a second plant (with costs identical to first) to produce output in part (a)? Elucidate.

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M9293028

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