5) A company's cost of producing q liters of a chemical is C(q) dollars and this quantity can be sold for R(q) dollars. Suppose C(2,000) = 5,930 and R(2,000) = 7,780. a) What is the profit at a production level of 2000? b) If MC(2,000) = 2.1 and MR(2,000) = 2.5, what is the approximate change in profit if q is increased from 2000 to 2001? Should the company increase or decrease production from q = 2000 and why? c) If MC(2,000) = 4.77 and MR(2,000) = 4.32, should the company increase or decrease production from q = 2,000 and why?

5) A company's cost of producing q liters of a chemical is C(q) dollars and this quantity can be sold for R(q) dollars. Suppose C(2,000) = 5,930 and R(2,000) = 7,780. a) What is the profit at a production level of 2000? b) If MC(2,000) = 2.1 and MR(2,000) = 2.5, what is the approximate change in profit if q is increased from 2000 to 2001? Should the company increase or decrease production from q = 2000 and why? c) If MC(2,000) = 4.77 and MR(2,000) = 4.32, should the company increase or decrease production from q = 2,000 and why?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 7MC

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