1. You have just leased a new nut grinding machine that has the capacity to produce 100 nuts per day. The daily lease cost on the machine is $405. The market price for one nut is $120. When running the machine, you observe that daily total costs are: TC(Q) = 405 + 20Q + 5Q², where Q is the number of nuts produced.

a. You have decided to minimize total costs. How much should you produce? What are the total economic profits?

b. You are convinced of the importance of getting as much market share as you can with his existing machine. How much do you produce? What are the total economic profits?

c. You now decide to minimize the average total cost of production. How much do you produce? What are the total economic profits?

d. You finally recognize the importance of maximizing profits. How much do you produce? What are the total economic profits? (Hint: price is marginal revenue in this case)