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4th Edition

James Stewart

Publisher: Cengage Learning

ISBN: 9781337687805

Chapter 4, Problem 48RE

**(a)**

To determine

**To find: **The production level for maximum profit by the graphs**.**

Expert Solution

The production level of

**Given information:**

The given information is

Commodity is

Demand function is

**Calculation:**

The cost function is

Demand function is

The revenue function

Or

Now we draw the curve of

That is at the production level of

Therefore, the production level of

**(b)**

To determine

**To find: **The production level for maximum profit by calculus method**.**

Expert Solution

The production level

**Given information:**

The given information is

Commodity is

Demand function is

**Calculation:**

Now the marginal revenue function is

And marginal cost function is

For maximize the profit we must have

Or

The root of the equation

Here we are not considering

Thus we have

Since

So

Therefore, the production level

**(c)**

To determine

**To find: **The production level that minimizes the average cost**.**

Expert Solution

The production level of

**Given information:**

The given information is

Commodity is

Demand function is

**Calculation:**

Now the average cost function is

And marginal cost is

For minimum average cost we must have

By graphical method

We draw the curve

We estimate the point of intersection of these curves. The x-coordinate of the point of intersection is about

So at the production level of

Now,

Then

And

So at