Question 1

Consider the output quantity vector below. It relates to quantity produced per plant, per day:

Q

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Consider a cubic total cost function (estimated using historical production data):

TC(Q)=5+0.32*Q-0.25*Q²+0.38*Q³

Compute the average and marginal cost starting from Q=1 up to Q=15. The absolute value of the difference between average and marginal cost isminimizedwhen _____ units are produced.

Question 2

Consider the information in Question No. 1.The absolute value of the difference between average and marginal cost ismaximizedwhen _____ units are produced.

Question 3

Consider the information in Question No. 1.AgCommodity Midwestis a small agricultural commodity firm, engaged in a perfectly competitive market. The demand facingAgCommodity Midwestis fully elastic. When per-unit price of their product is set at $100, they maximize their profit by producing _____ units (per plant, per day).

Question 4

Consider the information in Question No. 1.When per-unit price of their product declines by 25% (from $100 to $75), they maximize their profit by producing _____ units (per plant, per day).

Question 5

Consider the information in Question No. 1. What is the fixed cost of production forAgCommodity Midwest(per plant, per day)?

Question 6

Consider the information in Question No. 1.ManuProd Internationalis a producer and an exporter of small electric engines, engaged in monopolistic competition. Estimated using historical data, the demand facing this firms is given as:

P=250-4.35*Q

Under the cost structure in Question No. 1 and the above demand function,ManuProd Internationalmaximizes its profit by producing _____ units (per plant, per day).

Question 7

Under the cost structure in Question No. 1 and the demand function in Question No. 6,ManuProd Internationalmaximizes its profit by charging its customers _____ dollars per unit. (Note: Enter your answer below using two decimal points).

Question 8

Under the cost structure in Question No. 1 and the demand function in Question No. 6, the maximum economic profit forManuProd Internationalis equal to _____ dollars per plant, per day. (Note: Enter your answer below using two decimal points).