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AVC = 4832 – 0.5(Q) + 0.00007(Q)2
At what quantity is AVC minimized Suppose this firm sells 3500 units per month at a price of $4000.00 each and has fixed costs of $10,000 per month. What is the firm’s monthly profit? Suppose this firm operates in a perfectly competitive market. Is it producing the profit maximizing quantity for the current price? Why or Why not?
It is not possible to maximize profits by using a markup pricing strategy. To maximize profit, a firm should apply a uniform markup to each product it sells. Using markup pricing is more complicated than simply setting price equal to marginal cost.
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