Beta Industries manufactures floppy disks that consumers perceive as identical to those produced by numerous other manufacturers. Recently, Beta hired an econometrician to estimate its cost function for producing boxes of one dozen floppy disks. The estimated cost function is C = 75 + 3Q2 . (MC = 6Q). Suppose other firms in the market sell the product at a price of $25.
a. What are the firm's fixed costs?
b. How much should this firm charge for the product?
c. What is the optimal level of output to maximize profits? (assume firms can produce partial units)
d. How much profit will be earned?
e. In the short run, should this firm continue to operate or shut down? Why?