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Question: Suppose you are the manager of a watch making firm operating in a competitive market. Your cost of production is given by C(q) = 200 + 2q2 , where q is the level of output and C(q) is total cost. (The marginal cost of production is 4q; the fixed cost is 200.)
a) If the price of watches is 100, how many watches should you produce to maximize profit?
b) What will the profit level be?
c) At what minimum price will the firm produce a positive output?
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1. What does it entail?
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