wk2_pq - The Colorado College Department of Economics and...

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1 The Colorado College Department of Economics and Business Block 7 Econ 207 Practice Question set 2 1. The following is the total cost function of a firm: TC = aQ 3 + bQ 2 + cQ+ d where a, c, d >0; b<0 and Q denotes quantity of output. (a) Compute the marginal cost function for the firm. (b) Next obtain the level of output for which marginal cost is minimum. (c) What is the minimum value of marginal cost at this level of output? 2. Consider the following demand and cost function for a profit maximizing entrepreneur: P =70-5Q TC = 10Q+10Q 2 +10 (a) Using the above information obtain the expressions for Total revenue, marginal revenue and marginal cost. (b) Next using your marginal rule obtain the profit maximizing quantity of output. (c) What is the level of profit? 3. Happy Valley Supply Inc., provides recycled toner cartridges for printers. Like its competitors, Happy Valley must meet strict specifications. As a result, the replacement toner cartridge market can be regarded as perfectly competitive. Total cost relations per
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This homework help was uploaded on 04/19/2008 for the course EC 207 taught by Professor Ghosh during the Spring '08 term at Colorado College.

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wk2_pq - The Colorado College Department of Economics and...

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