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Calculate easy-flo optimal output

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Easy-Flo, Inc. supplies standard black printing ink to the nation's offset printing market. Like the output of its competitors, Easy-Flo's ink must meet strict specifications. As a result, the ink supply industry can be regarded as perfectly competitive. Total and marginal cost relations per week for Easy-Flo are:

TC = 2,500 + 5Q + 0.1Q2

MC = 5 + 0.2Q

a. Where Q is the number of barrels of ink produced.

b. Calculate Easy-Flo's optimal output and profits if ink prices are stable at $55 per barrel.

c. Calculate Easy-Flo's optimal output and profits if ink prices rise to $65 each.

d. If Easy-Flo is typical of firms in the industry, calculate the firm's equilibrium output, price and profit levels.

Reference no: EM131185858

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