Commercial Recording Ltd. is a manufacturer and distributor of reel-toreel

recording decks for commercial recording studios. Revenue and

cost relations are:

TR = $3,000Q - $0.5Q2

MR = $3,000 - $Q

TC = $100,000 + $1,500Q + $0.1Q2

MC = $1,500 + $0.2Q

i. Calculate output, marginal cost, average cost, price, and profit at

average cost-minimizing activity level.

ii. Calculate these values at the profit maximizing activity level.

iii. Compare and discuss your answers to parts A and B