Question: I need help with this practice problem. I have the chart set up in excel, but then do not know what to do or how
I need help with this practice problem. I have the chart set up in excel, but then do not know what to do or how to answer the questions. The information provide is:
- Fixed costs are $270,000 for staff, tools, lease
- C(q) = 270+30q+0.3q^2
- Demand given by p = 20-0.2q
- Calculate MR & AVC in the chart
- Plot the Demand, AC, MC, MR, & AVC curves
- What is the profit maximizing output q and p?
- What is the firm's best course of action in the short run?
- What is the firm's best course of action in the long run?
Chart is Attached
Annual Output Repairs in 000 Fixed Costs in $000 Variable Costs in $000 Total Cost in $000
0 270 0.0 270.0
5 270 157.5 427.5
10 270 330.0 600.0
15 270 517.5 787.5
20 270 720.0 990.0
25 270 937.5 1207.5
30 270 1170.0 1440.0
35 270 1417.5 1687.5
40 270 1680.0 1950.0
45 270 1957.5 2227.5
50 270 2250.0 2520.0
55 270 2557.5 2827.5
60 270 2880.0 3150.0
Avg Variable Cost Avg Cost in $ per Unit Marginal Cost in $ per Unit Price
MR Revenue
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