Question

suppose the average variable cost of production is $15 when output equals 110 and $15.25 when output equals 140. if the firm wants to maximize its profit or minimize its losses, what quantity will it produce and what price should it charge?

Answer 1

The firm should produce 110 units and charge a price of $15. This is because the average variable cost is lowest at this output level, and the firm will maximize its profit or minimize its losses by producing at the output level where the average variable cost is lowest.