How many units should the manager choose to produce?

Redstone Clayworks Inc. is located in Sedona Arizona and manufactures clay fire pits for patios. T Show more Redstone Clayworks Inc. is located in Sedona Arizona and manufactures clay fire pits for patios. They are one of about two dozen firms around the world that manufacture and sell clay fire pits for retailers such as Home Depot Lowes Front Gate and other upscale home product chains. There is virtually no product differentiation. A clay fire pit is a clay fire pit. The spreadsheet below gives some of Redstones production cost data. A template for the spreadsheet is provided in the Course Materials. You may download my template or create your own. Add columns to show respectively average fixed cost (AFC) average variable cost (AVC) average total cost (ATC) and short-run marginal cost (SMC).Then add columns to show respectively total revenue (TR) marginal revenue (MR) total profit average profit and profit margin. Assume that the world market demand and supply curves for clay fire pots intersects at $190 per unit. 1. If Redstone wanted to minimize average total cost how many units would it produce? 2. If Redstone wishes to maximize profit MARGIN how many units should it produce? 3. What level of output should the manager of Redstone choose to produce? Explain your choice in 50-100 words. 4. Make a copy of your spreadsheet and triple the fixed costs to 21000. How does this change your answer to question 3? Explain your result in 50-100 words. 5. Suppose that fire pits fall out of fashion and prices fall worldwide to $95. How many units should the manager choose to produce? Explain your answer in 50-100 words. Q TC TFC TVC 0 7000 7000 100 14000 7000 7000 200 23000 7000 16000 300 32000 7000 25000 400 43000 7000 36000 500 52000 7000 45000 600 74000 7000 67000 700 97000 7000 90000 800 111000 7000 104000 900 132000 7000 125000 1000 152000 7000 145000 Show less

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