Q1) A firm uses single plant with costs C = 160 + 16Q + .1Q2 and faces price equation
P = 96 - .4Q.
a) Determine firm-s profit maximizing price and quantity. What is its profit?
b) Firms production manager claims that firms average cost of production is minimized at output of 40 units. Furthermore, she claims that 40 units is firm's profit-maximizing level of output. Describe whether these claims are correct.
c) Could firm increase its profit using second plant (with costs identical to the first) to manufacture the output in part A? Describe.