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Woozles can be manufactured in either of two types of factory with the following cost functions. A perfectly competitive manufacturer of woozles currently has two factories, one of each type:
C1 = 0.2q12 + 5.2q1 + 25
C2 = q22 + q2 + 9.8
where Ci = total cost function for type i factory, i = 1, 2.
qi = production of type i factory, i = 1, 2.
Question (a) Market price for woozles is currently 4. What is the profit-maximizing (loss-minimizing) production from each factory?
Question (b) The manufacturer wants to produce 16.5 woozles. What is the cost-minimizing allocation of this production between the two factories?
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