Short Chapter Assignment – Ch 12

In Blair/Rush, please do Problems 2.5 Suppose that you are a manager for a firm like EBC Brakes, which manufactures brakes for automobiles and motorcycles. Your company has two plants, one in the United States and the other in the United Kingdom. The following tables include the estimated demand and marginal revenue for your brakes, along with the marginal costs at the two factories. What quantity and price maximize your firm’s profit? A. As chapter 12 thought us a company must find the place where the marginal cost is equal to the marginal revenue. For a perfectly competitive firm this will be the place where they be able to maximize their profits. When looking at both MC and MR tables (combined) for a perfectly competitive the place where the firm will choose to produce will be at equilibrium volume. Sense this question is looking to find the total from both plants we must add the quantity produced by both. Then we must find the place where MR=MC to find the profit-maximizing point. The profits maximization Quantity will be at 110 The profits maximization Price will be at 190 Price QD QS(UK) QS(US) TQ MR MC 196 104 47 42 89 92 66 195 105 48 44 92 90 68 194 106 49 46 95 88 70 193 107 50 48 98 86 72 192 108 51 50 101 84 74 191 109 52 52 104 82 76 190 110 53 54 107 80 78 Profit maximization point. 189 111 54 56 110 78 80 188 112 55 58 113 76 82 187 113 56 60 116 74 84 186 114 57 62 119 72 86 B. What is the profit-maximizing number of brakes produced in the U.S. plant? In the U.K. plant?