Asked by
Kaiden Littlejohn
on Dec 01, 2024
Verified
A competitive firm has a single factory with the cost function c(y) = 4y2 + 89 and produces 28 units in order to maximize profits.Although the price of output does not change, the firm decides to build a second factory with the cost function c(y) = 8y2 + 39.To maximize its profits, how many units should it produce in the second factory?
A) 14
B) 21
C) 9
D) 13
E) None of the above.
Cost Function
A mathematical formula used to calculate the total cost incurred by a company to produce a given level of output.
Maximizing Profits
The process by which a company determines the price and production level that generates the most profit.
- Examine the behavior of profit maximization in competitive firms.
- Examine how fixed and variable expenses influence a company's decisions regarding production and pricing.
Verified Answer
JJ
Learning Objectives
- Examine the behavior of profit maximization in competitive firms.
- Examine how fixed and variable expenses influence a company's decisions regarding production and pricing.