Could the firm increase its profit by using a second plant

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Reference no: EM13244313

A firmuses a single plant with costs C = 160 + 16Q + .1Q^2 and faces theprice equation P = 96 - .4Q

a. Find the firm's profit-maximizing priceand quantity. What is its profit?

b. The firm's production manager claimsthat the firm's average cost of production is minimized at anoutput of 40 units. Furthermore, she claims that 40 units is thefirm's profit-maximizing level of output. Explain whetherthese claims are correct.

c. Could the firm increase its profit by using asecond plant (with costs identical to the first) to produce theoutput in part (a)?

Reference no: EM13244313

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