Y7

QUESTION 3: Costs and Profits............. .10 points. (3 points) (a) Let production be Q(L) = 100 L2 -L' and costs be C(Q) = 250L + 600. Show how average costs change as Q rises. Explain why it behaves in the way it does. You can use a spreadsheet or math to illustrate. (3 points) (b) Suppose P - $15. What is the profit maximizing level of L and Q? Show your work. (4 points) (c) What is the firms shut-down price given costs = 250L + 600? Show and explain