Tex has a small plant that produces storm windows. Its total revenue function is ?? = 5.4?, and the total cost function is ?? = 30 + 3? + 0.03?2 What is the profit maximizing output for Tex? Show your work. What is his selling price? How much profit is he making? Now assume that Tex has fixed costs of only 5. With this different information, answer parts (a) and (b). How have fixed-cost changes influenced Tex's production decisions? Now assume that Tex has fixed costs of 55. How would your answer change to part (c)?

Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
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Tex has a small plant that produces storm windows. Its total revenue function is ?? = 5.4?, and the total cost function is ?? = 30 + 3? + 0.03?2

  1. What is the profit maximizing output for Tex? Show your work. What is his selling price?

  2. How much profit is he making?

  3. Now assume that Tex has fixed costs of only 5. With this different information, answer parts (a) and (b). How have fixed-cost changes influenced Tex's production decisions?

  4. Now assume that Tex has fixed costs of 55. How would your answer change to part (c)?

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