# 3. Sub-Temp, Inc., offers modular freezers to restaurants and other institutional buyers. Each freezer is a self-contained unit and can…

**3.** Sub-Temp, Inc., offers modular freezers to restaurants and other institutional buyers. Each freezer is a self-contained unit and can be used individually or in tandem with additional modules of different shapes and sizes. During the current period, Sub-Temp estimates the following total cost and demand relations for its line of modular freezers (11 pts.):

*TC* = $2,000,000 + $150*q* + $0.02q^{2}

* P* = $900 – $0.03*q*

where *TC* is total cost, *q* is output and *P* is average price.

**A.** Calculate the output level at which average total cost will be minimized.

**B.** Calculate the price, average total cost, marginal cost, and total profit at the output level found in Part A.

**C.** Calculate the profit-maximizing output level.

**D.** Calculate price, average total cost, marginal cost, and total profit at the output level in Part C.

**E.** Compare your answers to Parts A and C. Under what conditions will these answers be identical?