profit-maximizing price and quantity
use Samuelson, W. F., & Marks, S. G. (2012). Managerial Economics (7th ed.). Hoboken, NJ: John Wiley & Sons
Samuelson and Marks, Problem #10, p. 266.
A firm uses a single plant with costs C = 160 + 16Q + .1Q2 and faces the price equation P = 96 – .4Q.
a. Find the firm’s profit-maximizing price and quantity. What is its profit?
b. The firm’s production manager claims that the firm’s 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.
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