Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

7. (12 marks) Suppose that a rm can sell a quantity (1 at a price of 100 211. The rm's costs are given by C(q)

image text in transcribed
image text in transcribed
7. (12 marks) Suppose that a rm can sell a quantity (1 at a price of 100 211. The rm's costs are given by C(q) = q3 + 2g2 + F for some F > 0. The constant F is a xed cost that only needs to be paid if the rm opens its doors (think of this as registering the rm, buying land for production, etc.). If the rm does not open its doors, it earns O prots. a) (6 marks) Suppose that the rm has chosen to open its doors. What is the level of g which maximizes prots? b) (6 marks) For what values of F should the rm open its doors? In other words, for what values of F will the rm earn positive prots given the solution to part a)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Reading, Writing, And Proving A Closer Look At Mathematics

Authors: Ulrich Daepp, Pamela Gorkin

2nd Edition

1441994793, 9781441994790

More Books

Students also viewed these Mathematics questions