P2.10 Average Cost Minimization. Giant Screen TV, Inc., is a San Diego–based importer and dis- tributor of 60-inch screen, high-resolution televisions for individual and commercial customers. Revenue and cost relations are as follows:
TR = $1,800Q – $0.006Q2:
MR = DTR/DQ = $1,800 – $0.012Q TC = $12,100,000 + $800Q + $0.004Q2:
MC = DTC/DQ = $800 + $0.008Q
A. Calculate output, marginal cost, average cost, price, and profit at the average-cost mini- mizing activity level.
B. Calculate these values at the profit-maximizing activity level.
C. Compare and discuss your answers to parts A and B.