Q4) Average Cost-Minimization. Pharmed Caplets is an antibiotic product with monthly revenues and costs of: (10pts)

TR = $900Q - $0.1Q2TC = $36,000 + $200Q + $0.4Q2

MR = TR/Q = $900 - $0.2Q MC = TC/Q = $200 + $0.8Q

A. Set up a spreadsheet for output (Q), price (P), total revenue (TR), marginal revenue (MR), total cost (TC), marginal cost (MC), average cost (AC), total profit (), and marginal profit (M). Establish a range for Q from 0 to 1,000 in increments of 100 (i.e., 0, 100, 200, ..., 1,000).

B. Using the spreadsheet to, create a graph with MR, MC, and AC as dependent variables and units of output (Q) as the independent variable. At what price/output combination is total profit maximized? Why? At what price/output combination is average cost minimized? Why?

C. Determine these profit-maximizing and average-cost minimizing price/output combinations analytically. In other words, use revenue and cost equations to confirm your answers to part B.

D. Compare the profit-maximizing and average-cost minimizing price/output combinations, and discuss any differences. When will average-cost minimization lead to long-run profit maximization?