Problem 1: After a 10% price discount, a firm found that its weekly sales increased by 30%. If the marginal cost (MC) of this product is $40 each, what is the optimal price for this product?
Problem 2: Suppose the total cost equation for a competitive firm is given by:
TC =1,000+ 10Q -2Q^2 + 0.5Q^3
(A) At what output is the average variable cost (AVC) at a minimum?
(B) If the market price of the firm's output is $7.5 per unit, should the firm produce or shut down?