2. A Hawkeye has total cost and total revenue equations, but cannot figure out what the firm should do, Use your knowledge of profit-maximization to find the profit-maximizing quantity (X), the Total Revenue at that quantity, the Total Cost at that quantity, and the maximum profits earned. Total Cost X+4*X2 +100*X+100 Total Revenue --X2+500*X Profit-maximizing Quantity = Total Revenue at Profit-maximizing Quantity= Total Cost at Profit-maximizing Quantity= Maximum Profit Earned: =
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- 6. A firm manufactures and markets a product that sells for Birr 20 per unit. Fixed costs associated with activity total Birr 40,000 a month, while variable cost per unit is Birr 10. A maximum of 10,000 units can be produced and sold. Required: a) Drive the TR, TC and Total profit functions. b) Sketch the TR, TC and Total profit functions in the same coordinate system. c) What is the Break-even point (in terms of quantity and sales volume)? d) Drives the new TC, Total profit functions given that FC is increased by Birr 10,000 a month, and calculate the new break-even point. e) Drive the new TC and Total profit functions given that unit variable costs is decreased by 20% and calculate the new Break-even point. f) Drive the new TR and Total profits functions given that the unit selling price increases by 20% and calculate the new break-even point. g) What is the relationship that you may inter from BEP& FC, P& BEP and V& BEP? h) Assume selling prince increases by 10%…Output prices average (total)cost Total cost marginal cost Total profit/loss 10 10 -108 20 10 4 -48 30 10 5 3 40 10 6.20 40 50 10 8 60 60 10 10 60 2. i) Find the Average(total)cost, Total cost and marginal cost ii)In which market structure does Johnson Electronics (Pty)Ltd operate? iii)what level of output maximizes the firms profitPakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q2 and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$. a- Write the equations of the firm’s costs, as a function of Q: Average Total Cost ATC Average Variable Cost AVC Average Fixed Cost AFC b- Given above costs can you determine what will be the firm’s production in Stage 1? c- What is the breakeven price and breakeven quantity for this firm?
- 1) Suppose that market demand is linear, q = 70 - p. Marginal costs are constant and equal to 10. The upstream firm, which is a manufacturer, does not sell directly but through a single downstream firm, which is a retailer. The manufacturer set the wholesale price w at stage 1. At stage 2, the retailer who is assumed not to incur any costs except wholesale price (w), observes the wholesale price and sets the retail price p. Find the optimal wholesale price (w*): Find the optimal retail price (p∗): Find the quantity demanded (q∗) that corresponds to p∗: Find the manufacturer’s profit (π*M) that corresponds to p∗: Find the retailer’s profit (π∗R) that corresponds to p∗: Find the overall channel profit (Π∗ = π*M+ π*R): Next, consider a case that the integrated firm produce the product and sell directly to consumers. Suppose the market demand is q = 70 - p. Marginal costs are constant and equal to 10. Find the optimal retail price (pi): Find the quantity demanded (qi)…Suppose a food company has both food and store divisions. The food divisionproduces burgers that are sold downstream at the store. Assume that the storesells 1,000 burgers at $10, 2,000 burgers at $9, 3,000 at $8, and so on up to10,000 burgers at $1. The price the food division charges for a burger is$3.50. What will be the profit-maximizing price for the entire company? How muchprofit will the company make? What is the revenue-maximizing quantity for thestore?Question #5What is the MC=MR Profit Maximization point? What quantity should Delicious Deserts be producing at 'and' what price should they be charging to maximize their profits? Question #6 Why isn't it a good idea for them to produce and sell as many cakes as they can? Is it more profitable to sell less cakes at this current stage of their business? Question #7Do you have any other recommendations for Delicious Deserts to increase their revenues, profits, market share, and client retention?
- J 7 let: MC = 12Q⁵+5Q⁶-4Q⁵-5 MR = 16Q¹⁵+15Q²-12Q⁶-10Q MP = 12X⁵+25X⁷-24X⁴-7X Determine the functions of total cost, total revenue, total production4. Assess which of the following is true and which is false.A firm’s profit equation is given by π = -100 + 160Q – 20Q2. Therefore,a) The firm’s fixed cost is 100.b) The firm’s fixed cost is 40 and variable cost is 20.c) Marginal profit is Mπ = 160 – 20Q.d) The firm’s profit-maximizing output is Q = 4.e) Marginal profit is Mπ = 160 – 40Q and it is positive for quantities that are lower than theprofit-maximizing quantity.cc4. a)What is the largest number of thingamabobs that can be produced and sold for Yaster Inc. to break even? thingamabobs. Round to the nearest thingamabob. b)How many thingamabobs should Yaster Inc. produce and sell in order to maximize profit? thingamabobs. Round to the nearest thingamabobs.
- 13. What is the maximum profit for the price(s)you listed for Question 12? (Question 12: How much should Frostee's Doggie Donuts charge to maximize its profit?) Answer to Questions 14 and 15 based on the Cost of Goods Sold increases from $3 to $4 due to higher ingredient costs. 14. How much should Frostee's Doggie Donuts charge to maximize its profit based on the above change? 15. What is the maximum profit for the price(s)you listed for Question 14?Q 4 5 6 Revenue and cost figures can be observed in the table below for Greensons Organic. Use the information in the first three columns to complete the table Output /Sales(Q) Total Revenue (TR) Total Costs (TC) Profit /Loss Marginal Revenue (MR) Marginal Costs (MC) Addition to profit 0 0 8 -8 1 7 14 -7 7 6 2 14 19 -5 7 5 3 21 23 -2 7 4 4 28 26 2 7 3 5 35 28 7 7 2 6 42 31 11 7 3 7 49 38 11 7 7 8 56 48 8 7 10 2. Is Greensons Organic operating in the short run or in the long run? Justify your answer 3. Calculate average variable costs when the level of output is equal to 5 units. 4. What level of output does Greensons Organic maximize profit? Justify/explain your answer and show calculations 5. When will the diminishing marginal returns start to prevail for Greensons Organic and why? 6.…1. Which statement must be false?a) A firm with constant returns to scale in production will not have fixed costs.b) When a firm has increasing returns to scale, the upward sloping marginal cost curve lies above the average cost curve.c) All firms face diminishing returns to scale when they have a high output.d) When a firm produces the output which minimises average cost, marginal cost and average cost will be equal. 2. Which of the following statements about the relationship between marginal revenue, price, and the price elasticity of demand, is true?a) A perfectly elastic demand curve will be vertical, showing that the firm sells a fixed output at all prices.b) The more inelastic the demand curve, the flatter it will be where it meets the price (vertical) axis.c) If the price elasticity of demand PED = -1 at all points on a demand curve, then the firm can choose any level of output, and earn the same revenue.d) When a monopoly maximises its profits, demand for its output will be…