1. Suppose you are the manager of a watchmaking firm operating in a competitive market. Your
cost of production is given by C = 200 + 2q2
, where q is the level of output and C is total cost.
(The marginal cost of production is 4q; the fixed cost is $200.)
(a) If the price of watches is $100, how many watches should you produce to maximize profit?
(b) At what minimum price will the firm produce a positive output?