A. The average hauling (freight) cost is $8Q; AFC = 8Q. Write the firm's average aggregated cost equation.
B. Now suppose the firm is facing the following market demand:
Q = 7,600,000 - 100 P
Determine the optimal number of plants that the firm should have to take full advantage of the market demand.
C. Calculate the firm's profit.
D. Compare the firm's profit with multiple plants with its profit with a single plant.
Hint: The firm's MC equation based on its aggregated total cost (including the freight cost) is: MC = 10,000 - 8 Q + .012 Q2
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