Reference no: EM1368050
Average Cost Minimization. Better Buys, Inc., is a leading discount retailer of wide-screen digital and cable-ready plasma HDTVs. Revenue and cost relations for a popular 55-inch model are:
TR = $4,500Q ï? $0.1Q2
MR = ï?TR/ï?Q = $4,500 ï? $0.2Q
TC = $2,000,000 + $1,500Q + $0.5Q2
MC = ï?TC/ï?Q = $1,500 + $1Q
A. Compute output, marginal cost, average cost, price, and profit at the average cost-minimizing activity level.
B. Compute these values at the profit-maximizing activity level.
C. Compare and discuss your answers to parts A and B.
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