Beta Laundry's cost function is C(q)equals=70+24q+q^2. How much does it produce if p=$60? The firm produces...
Beta Laundry's cost function is
C(q)equals=70+24q+q^2.
How much does it produce if p=$60?
The firm produces
q=______units.
(Enter your response as a whole number.)If the government imposes a per unit tax of t=22,
what quantity maximizes its after-tax profit?
(Hint: per unit tax increases firm's MC and AVC by the amount of tax, for instance if per unit tax is 2 dollars, MC increases by 2 dollars and AVC increases by 2 dollars)
With the tax, the profit-maximizing quantity for the firm to produce is
q=_____units. (Enter your response as a whole number.)
Does it operate or shut down?
The firm should produce/shutdown?
Homework Answers
a) MC = dC/dq = 24 + 2q
Profit is maximized where P = MC = 60
q = 36/2 = 18 units
b) Per unit tax = 22
MC = 22 + 24 + 2q = 46 + 2q
P = MC :
60 = 46 + 2q
q = 7 units
The firm should produce as it is able to recover its fixed costs. (P > min AVC)
Add Answer to:
Beta Laundry's cost function is
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