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- 1. If profit is maximum at sales of 700 units, does the firm have no choice but to limit sales at this level? Explain your answer. 2. A business firm produces and sells a particular Variable cost is P30/unit. Selling price is P40 per unit. Fixed cost is P60,000. a. What is the break-even quantity and break-even point? Show your solution. 3. A manager makes the statement that output should be expanded as long as average revenue exceeds average Does this strategy make sense? Explain. 4. Suppose that the steel firm’s costs are shown below: Complete the table and determine the optimal output to be Price of steel P17 per unit. Output (Q) TFC TVC TC MC TR MR Profit/Loss 0 500 0 1 500 50 2 500 90 3 500 140 4 500 200 5 500 270 6 500 350 7 500 450…29. Refer to Figure 15-5 (attached). At the profit-maximizing level of output, marginal revenue is equal to P3. marginal cost is equal to P3. average revenue is equal to P2. average total cost is equal to P6.QUESTION 19 Suppose a firm's inverse demand curve is given by P = 340 - 0.80 and its cost function is C = 120 + 100Q, then the production (Q) that maximizes profit is equal to: Or Q = 150 Or Q=250 EITHER Q=100 Q=200
- 3. Suppose that a firm faces a demand curve that has a constant elasticity of 2. This demand curve is given by q = 256=P2. Suppose also that the Örm has a marginal cost curve of the form MC = 0:001q. a) Graph these demand and marginal cost curves. b) Calculate the marginal revenue curve associated with the demand curve; graph the curve. c) At what output level does marginal revenue equal marginal cost?A firm has the following average cost and demand function Ac= 3Q+7+12/Q Q= 10-P Write out the total cost and total revenue functions in terms of Q. Find the average cost, marginal cost, average revenue and marginal revenue functions. Formulate the total profit function in terms of Q. Find the profit maximization level of output. What is the maximum profit.Assume that marginal revenue equals rising marginal cost at 100 units of output. At this output level, a firm's average total cost is $11 and its total variable cost is $600. If the price of the product is $3 per unit and the firm follows its optimal strategy, the firm will earn an economic profit equal to
- please solve question 4- Prove that total revenue is maximized for a linear demand function, P = a - bQ point where Q = a / 2 * b . - Minimize the following cost function: TC = 1/3 * Q ^ 3 - 8.5Q ^ 2 + 60Q + 271) Two large diversified consumer products firms are about to enter the market for a new pain reliever. The two firms are very similar in terms of their costs, strategic approach, and market outlook. Moreover, the firms have very similar individual demand curves so that each firm expects to sell one-half of the total market output at any given price. The market demand curve for the pain reliever is given as: Q = 2600 - 400P. Both firms have constant long-run average costs of $2.00 per bottle. Patent protection insures that the two firms will operate as a duopoly for the foreseeable future. Price and quantity values are stated in perbottle terms. If the firms act as Cournot duopolists, solve for the firm and market outputs and equilibrium prices. 2) Hale's One Stop and Auto Service competes with Murray's Gas Mart. The local demand is: Qd=25−10P⇔P=2.50−0.1Qd Both firms sell exactly the same quality of gasoline. Thus, if the firms charge a different price, the lower price firm will…Suppose that the total revenue function of a firm is defined as TR= (P)(Q) where TR= f(Q). The usual notation applies. 1. . Find the total revenue function TR(Q) if the inverse demand function is given by P(Q) = 80-0.2Q2. What is the shape of the total revenue function if graphed? State your basis.
- 1- Suppose that the total cost function of a firm is given as follows;TC = 500 + 2Q2And the price of the firm’s product is determined by the market equilibrium at $100.a- Set the profit maximizing condition . Find the profit maximizing output level for this firm .b- What is the total revenue ?c- What is the total cost ?d- What is the profit earned by the firm ?e- Illustrate your answer by using a well-labeled graph .f- Denote the break even price level with Pb on the same graph .g- Denote the shut down price level with Ps on the same graph.h- Show the firm’s supply curve on the same graph .i- Does the firm function in short-run or long-run ? Why ?A firm has the following demand and average total cost functions: Q = 30 − PATC =(7/Q)− 6 +(1/2)Q Find:i. The total revenue function ii. The total cost function iii. The level of output that will maximize revenue and minimize total costs iv. The profit function and the level of output that maximize profits v. Show that AR = PDiscuss the importance of price elasticity of demand, income elasticity of demand and cross price elasticity of demand to a sales manager selling soft drinks like Coca Cola If a firm faces the Marginal Cost schedule MC = 180 + 0.3Q2 and the MR schedule is MR = 540 = 0.6Q2 and that Total Fixed costs are $65. What is the maximum profit it can make? Assume that the second-order condition for maximum is met