Rons Window Washing Service is a small business that operates in the perfectly competitive residential window washing industry in Evanston Illinois. The short-run total cost of production is STC(Q) = 40+ 10Q + 0.1Q2 where Q is the number of windows w
Rons Window Washing Service is a small business that operates in the perfectly competitive residential window washing industry in Evanston Illinois. The short-run total cost of production is STC(Q) = 40+ 10Q + 0.1Q2 where Q is the number of windows washed per day. The corresponding short-run marginal cost function is SMC(Q) = 10 + 0.2Q. The prevailing market price is $20 per window.a) How many windows should Ron wash to maximize profit?b) What is Rons maximum daily profit?c) Graph SMC SAC and the profit-maximizing quantity. On this graph indicate the maximum daily profit.d) What is Rons short-run supply curve assuming that all of the $40 per day fixed costs are sunk? e) What is Rons short-run supply curve assuming that if he produces zero output he can rent or sell his fixed assets and therefore avoid all his fixed costs?