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.

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.

For each of the following graphs, identify the firm's profit-maximizing (or loss-minimizing) output. Is each firm making a profit? If not, should the firm continue to produce in the short run?
(See Attachment for Graphs)

(1) Global Investment Group operates in a perfectly competitive industry with the following Costand Revenue data:
AverageTotalCost = $2.50; Quantity sold = 9000 Units; Price Per Unit = $3.50; Marginal Revenue = $3.50; Marginal Cost = $3.50:
(a) What is the loss minimizing output level for the firm?
(b) What is the A

At a product price of $41 will this firm produce in the short run? Why or why not? If it is preferable to produce, what will be the profit- maximizing or loss-minimizing output? Explain. What economic profit or loss will the firm realize per unit of output?
TotalAverageAverageAverage

Suppose that a perfectly competitive firm faces a market price (P) $5 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curve at an output (Q) level of 1,500 units. If the firm produces 1,500 units, its average variable costs (AVC) equal $5.50 per unit, and its

Please help with the following problem.
Optimization:
Giant Screen TV, Inc, is a manufacturer and distributor of high-resolution 50-inch television monitors and consoles for individual and commercial customers. Revenue andcost relations are:
TR = $4,500Q - 0.1Q^2
MR = $4,500 - 0.2Q
TC = $2,000,000 + $1,500Q + 0.5Q^2
MC

Complete Table
1. Summarize your calculations and use Microsoft Excel.
2. Using Excel, draw one graph showing average fixed costs, average variable costs, averagetotalcosts, marginal revenue, and marginal costs.
3.Using the data in the table and on your graph, what is the profitmaximizing, or loss minimizing level

1. A firm sells in a competitive market in which price is $10. Its marginal cost is 2 + .5Q. Determine the profit-maximizing level of output.
2. A perfectly competitive firm's lowest averagetotalcost is $48 and the corresponding average variable cost at that output is $24. Marginal costandaverage variable cost are equ

Assume a monopolist with the following:
Qd =100-10p
TC = 1 + 2Q
Find the following:
a) Price at profitmaximizing output
b) Profitmaximizing output
c) Total Revenue at profitmaximizing output
d) TotalCost at profitmaximizing output
e)Profit

With the total-revenue schedule of problem 1 (revised derivatives) and the total-cost schedule of problem 7 (cost function), show the profit-maximizing level of output?
Problem history:
1. Derive the total-revenue, average-revenue, and marginal-revenue schedules from Q = 0 to Q = 4 by 1s
Average revenue (AR) = total re