A company produces canned drinks and sells them to supermarkets at $2 per unit. The resources the company used are the workers with daily wage of $20 and a machinewhich it rents from the machine supplier at $20 per day. The company operates in a small factory by paying a daily rent of $10. The number of canned drinks it produces depends on the number of workers it hires per day, as shown in the table below Number of Workers Fixed Cost Variable Cost Quantity produced Total Revenue Total Cost Total Profit 0 30 0 0 0 30 -30 1 30 20 10 20 50 -30 2 30 40 30 60 70 -10 3 30 60 65 130 90 40 4 30 80 80 160 110 50 5 30 100 88 176 130 46 6 30 120 93 186 150 36 (i) Compute the optimal output and the profit or loss if the landlord increases the rent of factory to $20 per day (ii) Assume that the rental of factory remains at $10 per day but the government imposes a production tax of $0.50 per canned drink. Compute the optimal output and the profit or loss for the company.
A company produces canned drinks and sells them to supermarkets at $2 per unit. The resources the company used are the workers with daily wage of $20 and a machinewhich it rents from the machine supplier at $20 per day. The company operates in a small factory by paying a daily rent of $10. The number of canned drinks it produces depends on the number of workers it hires per day, as shown in the table below Number of Workers Fixed Cost Variable Cost Quantity produced Total Revenue Total Cost Total Profit 0 30 0 0 0 30 -30 1 30 20 10 20 50 -30 2 30 40 30 60 70 -10 3 30 60 65 130 90 40 4 30 80 80 160 110 50 5 30 100 88 176 130 46 6 30 120 93 186 150 36 (i) Compute the optimal output and the profit or loss if the landlord increases the rent of factory to $20 per day (ii) Assume that the rental of factory remains at $10 per day but the government imposes a production tax of $0.50 per canned drink. Compute the optimal output and the profit or loss for the company.
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
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
Problem 3MC
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A company produces canned drinks and sells them to supermarkets at $2 per unit. The resources the company used are the workers with daily wage of $20 and a machinewhich it rents from the machine supplier at $20 per day. The company operates in a small factory by paying a daily rent of $10. The number of canned drinks it produces depends on the number of workers it hires per day, as shown in the table below
| Number of Workers | Fixed Cost | Variable Cost | Quantity produced | Total Revenue | Total Cost | Total Profit |
| 0 | 30 | 0 | 0 | 0 | 30 | -30 |
| 1 | 30 | 20 | 10 | 20 | 50 | -30 |
| 2 | 30 | 40 | 30 | 60 | 70 | -10 |
| 3 | 30 | 60 | 65 | 130 | 90 | 40 |
| 4 | 30 | 80 | 80 | 160 | 110 | 50 |
| 5 | 30 | 100 | 88 | 176 | 130 | 46 |
| 6 | 30 | 120 | 93 | 186 | 150 | 36 |
(i) Compute the optimal output and the profit or loss if the landlord increases the rent of factory to $20 per day
(ii) Assume that the rental of factory remains at $10 per day but the government imposes a production tax of $0.50 per canned drink. Compute the optimal output and the profit or loss for the company.
Hi, may i request for a more detailed explanation to these 2 parts? Thank you in advance.
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