Suppose you are the manager of a watch making firm operating in a competitive market. Your cost of production is given by C = 200 + 2q2, where q is the level of output and C is total cost. (The marginal cost of production is 4q; the fixed cost is $200.)
a) If the price of watches is $100, how many watches should you produce to maximize profit?
b) What will the profit level be?
c) At what minimum price will the firm produce a positive output?

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Competitive market leads to PMC for equilibrium MC4q ... View the full answer