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 + 3Q² (a) 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 + 3Q² (a) 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 6E

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