How many bottles will he produce and what are his profits

Assignment Help Business Economics

Reference no: EM131098885

Tom owns a winery which produces red wines. He is a profit maximizing, pricetaker. The market price for a bottle of red wine is $40. His costs are given by C = 0.1Q^2 + 20Q + 100 where Q represents the number of bottles.

a. How many bottles will he produce and what are his profits?

b. Assume the state now requires a $100 per year license for all wine producers. Assume the market price (here, the price of a bottle of red wine) remains at $40. How many bottles does Tom produce? What are his profits?

c. Suppose instead the state requires all wine producers to pay a $10 fee for each bottle. Again, assume the market price (here, the price of a bottle of red wine) remains at $40. How many bottles does Tom produce? What are his profits?

d. Is this firm in the long run or in the short run?

Reference no: EM131098885

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