1. The Elsie Dairy Company produces 1,000 gallons of chocolate milk per day, and sells it at a price of $1.50 per gallon. Its total fixed cost is $200 per day and its total variable cost is $150 per day. a) Is this firm earning a profit? How much? Show the calculations that led to your answer. (Use back of page.) b) If it is earning a profit, is it maximizing its profit? Explain. 2. What is the rule of profit maximization? How can this rule be restated when the firm is a price taker? 3. Given the following information: Quantity Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 1 300 100 400 100 2 150 75 225 50 3 100 70 60 4 75 73 80 5 60 80 110 6 50 90 140 7 43 103 180 8 38 119 230 9 33 138 290 10 30 160 360 a) If market price is $140, then... 1. the firm will produce quantity ___________ 2. Total revenue = _____________ 3. Total cost = _______________ 4. Profit for this firm = _______________ b) If market price is $230, then... 1. the firm will produce quantity ___________ 2