1. The Zinger Company manufactures and sells a line of sewing machines. Demand per period (Q) for a particular model is given by the following relationship: Q = 400 – .5P where P is price. Total costs (including a "normal" return to the owners) of producing Qunits per period are: TC = 20,000 + 50Q + 3Q? ka) Express total profits (t) in terms of Q. b) At what level of output are total profits maximized? What price will be charged? What are total profits at this output level? (c) What model of market pricing has been assumed in this problem? Justify your answer.
1. The Zinger Company manufactures and sells a line of sewing machines. Demand per period (Q) for a particular model is given by the following relationship: Q = 400 – .5P where P is price. Total costs (including a "normal" return to the owners) of producing Qunits per period are: TC = 20,000 + 50Q + 3Q? ka) Express total profits (t) in terms of Q. b) At what level of output are total profits maximized? What price will be charged? What are total profits at this output level? (c) What model of market pricing has been assumed in this problem? Justify your answer.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter11: Price And Output Determination: Monopoly And Dominant Firms
Section: Chapter Questions
Problem 5E
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