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Microeconomics

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Profit Maximization in PC with Constant Marginal Costs

MICRO-GKRX9E

Santiago is an oyster farmer in a competitive market and comes to you for advice regarding how much he should produce in order to maximize his profits. The going market price for oysters is \$2 an oyster and his cost function (per oyster) is the following: $C(q) = 1.5q$. Note this means he has no fixed costs and his marginal costs of production are constant. The minimum he can produce is 0 oysters and the maximum he can produce is 1,000 oysters.