The following tables show a small firms long-run average cost of manufacturing a good at two different
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a. Complete the third and fourth columns of each table.
b. Suppose the price of the good is $60. How much should the firm produce in each plant in order to maximize the firm€™s profit? Find the firm€™s profit.
c. A new manager is assigned to the production department. He thinks that the firm can profitably move all production to Plant 2 since the average cost of production is lower in Plant 2 than in Plant 1. If the firm only uses Plant 2, how much should it produce in order to maximize profits? Find the firm€™s profit. Assume zero fixed cost.
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a b Since the price of the good is 60 profits are maximized when marginal cost of productio...View the full answer
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