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Welcome to the Q&A for ECN/APEC 2010, where you can ask questions and receive answers from your fellow students, the TA, and your professor.

Please only ask questions about the material for the course. Try to create discussions about the material we see in class, instead of just thinking of economics in general (this is an introduction to microeconomics class, not a policy or government class).

For questions and discussions about course organization or other course related topics, come see us after class or during office hours.

Feel free to discuss quiz questions on the Q&A, but do not provide direct answers to quiz questions before the quiz's due date.

Maximizing Profit and Average Cost Curve

+1 vote
22 views

I came across this practice question on the mruniversity site and I had a hard time answering it. The correct answer is $48.34, but I am not sure why.

Given the cost function for Simon, a housepainter in a competitive local market, below, answer the questions that follow. (You may want to calculate average cost.) What is the minimum price per room at which Simon would be earning positive economic profit? image

asked Apr 30 by canvas-ea8c2910cb265 (165 points)

1 Answer

+1 vote
For this look at the average for each number of rooms. While at 6 rooms a week the average cost is 76$, at 3 rooms per week the average cost is 48.33 so at $48.34 per room he is making a profit. I hope that made sense but if anythings unclear just ask.
answered May 1 by canvas-cfd39ce1a6b2d (140 points)
Not OP, but the average cost is lowest at 3 rooms? So adding one cent more would be the minimum where a profit would be made, taking in the average per room?
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