Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Suppose you are the manager of a watchmaking firm operating in a competitive market. Your cost of production is given by
C=400+2q2,
where q is the level of output and C is total cost. (The marginal cost of production, MC(q), is 4q;the fixed cost, FC, is $400).
If the price of a watch is $100, how many watches should you produce to maximize profits?
You should produce______watches.(Enter your response as an integer.)
What will the profit level be?
Profit will be $___________. (Enteryour response rounded to two decimal places.)
At what minimum price will the firm produce a positive output?
In the short run, the firm will produce if price is greater than
$__________ per watch. (Enter your response as an integer.
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