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Atlantic Richfield Company (ARCO) is a producer of gasoline, a highly competitive industry. ARCO's weekly cost function is C(q) = 2q3 + 150q + 500, where q is the quantity of gas produced (in thousand gallons).
(a) Suppose the market price for gas is $1500 per thousand gallons. Calculate ARCO's maximal profit per week.
(b) Suppose a global oil supply glut pushes the market price for gas down to $250 per thousand gallons. Is it still profitable for ARCO to produce gasoline using the current technology?
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