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Minimizing average total cost and maximizing profit

1. If Redstone wanted to minimize average total cost, it would produce how many units?

2. If Redstone wishes to maximize profit MARGIN, it should produce how many units.

3. What level of output should the manager of Redstone choose to produce? Explain briefly.

4. Now triple the fixed costs to 15,000 in your spreadsheet. How does this change your answer to question 3.

5. Suppose that Nancy Pelosi declares that clay fire pits are causing global warming, and demand for fire pits shrinks substantially in the U.S. (especially in California). Fire pit prices fall worldwide to $65. Now, the manager of Redstone should produce how many units? Explain your answer.

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1. If Redstone wanted to minimize average total cost, it would produce how many units?
Redstone will produce 300 units at the lowest average total cost of $90 per unit.
2. If Redstone wishes to maximize profit MARGIN, it should produce how many units.
Redstone ...

Solution Summary

The minimizing average total cost and maximizing profits are examined. The level of outputs are given.

$2.19