The market for beer is perfectly competitive. The price of a barrel of beer is $40. Fine Beers is a company that produces the beer and has total cost function of TC = 480 + Q2 (Q squared). It also has a marginal cost given by MC = 2Q, where Q is barrels of beer produced each week.
A. Plot on a graph fine beers demand curve and maringal cost (MC) curve.
B. Plot on a graph fine beers average total cost (ATC) for output levels of 10, 20, 30, 40 barrels.
Suppose the price of a secret ingredient used by Fine Beers falls, so that the companies total cost curve becomes TC = 480 - 10Q + Q2 (Q squared) and its marginal cost curve becomes MC = -10 + 2Q.
A. Plot on a graph fine beers new marginal cost (MC) curve and fine beers new average total cost (ATC) curve for output levels of 10, 20, 30, 40 barrels.
B. with fine beers new cost function, what is the profit maximizing level of output in barrels? (0, 10, 20, 25, 40, 50).
C. at fine beers profit maximizing level of output, what is fine beers profit? (0, 120, 145, 320, 1,000, -55, -80, -480)