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Homework answers / question archive / Balboa is a manufacturer of alarm clocks, with the total cost of production as TC(q)=20+4Q+Q2TC(q)=20+4Q+Q2 so that the marginal cost of production is MC(q)=4+2QMC(q)=4+2Q

Balboa is a manufacturer of alarm clocks, with the total cost of production as TC(q)=20+4Q+Q2TC(q)=20+4Q+Q2 so that the marginal cost of production is MC(q)=4+2QMC(q)=4+2Q

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Balboa is a manufacturer of alarm clocks, with the total cost of production as TC(q)=20+4Q+Q2TC(q)=20+4Q+Q2 so that the marginal cost of production is MC(q)=4+2QMC(q)=4+2Q.

a. If Balboa is producing 4 units of alarm clocks, what is the price in the market?

b. What is the average cost and average variable cost at that production level?

c. Should Balboa remain in the market at that price in the short run? What about the long run? Explain thoroughly.

d. Balboa is thinking of investing in new machinery. Should they undertake that investment given the current market prices? Explain thoroughly.

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