Computing profit maximizing quantity

Assignment Help Macroeconomics

Reference no: EM1316144

A firm uses a single plant with costs C = 160 + 16Q + .1Q²and faces the price equation

P = 96 - .4Q.

a) Find the firms profit maximizing price and quantity. What is its profit?

b) The firms production manager claims that the firms average cost of production is minimized at an output of 40 units. Furthermore, she claims that 40 units is the firm\'s profit-maximizing level of output. Explain whether these claims are correct.

c) Could the firm increase its profit by using a second plant (with costs identical to the first) to produce the output in part A? Explain.

Reference no: EM1316144

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