Question

3. 3M, a U.S. manufacturer of Metered Dose Inhalers (MDIs), has the following profit equation: (q) = R(q)- C() = 80g -- (90 + 409 + 109?) where g is in millions, (a) (21 points) Identify the fixed costs, variable costs, and marginal costs for 3M. (b) (7 points) What level of output (9) maximizes profit? (c) (16 points) Using the optimal level of output (m), calculate the revenue for 3M and calculate the variable cost

Answer 1

firm ©) 80(1) - 0-10Cl) -20 Q 3M is a us Manufacturing TQ) - RO) c@) TTCQ)= 80Q - (90+40 QH0R?) TR=80Q TC=90 tuo atlo Q² Fixed cost $90 variable cost = 40Q +10 Q² MC=dTC o fuocis + 200 MC = 40 +2oQ Maximization of Firm (34) OTT(Q) oo (b) tal 40 -20 ~ STTQ) dQ

(R) aa ५० -२०२ TQ) २ ५०-२०२ . २०२ =५० Q =५० २० २ - २ unti TR = 802 = 80(2) - 416० VC= १० +५० (२) +10 (2) = १०+80 +५० = ६२।० (d) = TC = "CAFE = २० +१०

TC = 300 Profit .TR -TC = 160 - 300 =-$140 Loss 140 ce -sun since Firm is ear earning economic loss of $140 in Short-run, so firm should shut-down in short. because Firm is not able to Couzi ats variable cost. Hence For minimigin dass firm should stop production (f) yes firm should exit in Long-run because Firm economic loss of $100 of $140 which is which is greates than FC of $90. Hence Firm should exit Industry in L. R. is bearing