a management consultant has been asked to calculate and analyze market demand for a new video game that is about to be offered in both retail (R) and wholesale (W) customer over the internet. The client estimates a Fixed Cost of 750,000 per year and a Marginal cost of 20/unit. Based on their market study, the following demand functions were derived: Pr = 62.50 – 0.0005Qr and Pw = 50 - 0.002Qw; Pr is the Price for Retail, Pw is the price for wholesale, Qr is the quantity for Retail and Qw is the quantity for wholesale, Complete the table below by calculating the quantity demanded both for retail and wholesale, market demand, Total Revenue, Total Cost and Profit. PRICE Retail Demand Total Revenue (P x Q) Total Cost PROFIT 65 60 55 50 45 40 35

a management consultant has been asked to calculate and analyze market demand for a new video game that is about to be offered in both retail (R) and wholesale (W) customer over the internet. The client estimates a Fixed Cost of 750,000 per year and a Marginal cost of 20/unit. Based on their market study, the following demand functions were derived: Pr = 62.50 – 0.0005Qr and Pw = 50 - 0.002Qw; Pr is the Price for Retail, Pw is the price for wholesale, Qr is the quantity for Retail and Qw is the quantity for wholesale, Complete the table below by calculating the quantity demanded both for retail and wholesale, market demand, Total Revenue, Total Cost and Profit. PRICE Retail Demand Total Revenue (P x Q) Total Cost PROFIT 65 60 55 50 45 40 35

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

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 2.2CE

See similar textbooks

Similar questions

You have been hired as an economic consultant to assess the feasibility of building a new hockey arena in the city of Saskatoon. The demand curve for attendance at the new arena per game is given by P = 100 – 0.005Q and average attendance per game (35 home games) is optimistically forecast to be 12,000; the demand curve for other entertainment goods which are thought to be substitutes for basketball games is given by P = 1500 – 0.01Q and an estimated total of 100,000 tickets per year are sold for these events. Per capita income in Saskatoon is currently estimated to be $40,000 per year, which is forecast to rise to $40,100 after stadium construction is completed (local population = 600,000). The income multiplier is thought to be 1.2. Construction costs for the new arena are budgeted to total $175 million with annual arena maintenance costs of $5 million. The city will pay for the annual maintenance costs for the first three years of arena operations. The market rate of interest is 2%.…
Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is −3.0. The marginal cost of producing the product is constant at $150, while average total cost at current production levels is $215. Determine your optimal per unit price if: Instructions: Enter your responses rounded to two decimal places.
A quadratice profit function π (Q) = hQ2 + jQ + k is to be used to reflect the following assumptions: (a) if nothing is produced, the profit will be negative (because of fixed costs) (b) the profit function is strictly concave. (c) the maximum profit occurs at a positive output level Q*. What parameter restrictions are called for?
PSMC produces two types of GPU. One is gaming GPU (Type 1) and the other is pro GPU (Type 2). Their market data are listed below. a) What is the total profit generated from the two products, as a function of the two decision variables p1 and p2? b) When does the profit function reach its optimal value? c) The production capacity of PSMC semiconductors is constrained by 2v1 + v2 ≤ μ. What is the range of μ that makes the solution point not on the constraint boundary? *please answer a-c and either type or neatly write your work, steps, and answers* No EXCEL thank you
Your company is contemplating bidding on an RFP (Request For Proposal) to produce 100,000 units of a specialized part. Suppose, however, that the requesting company really needs only 90,000 units of the part. Also assume that, because the part is specialized, potential suppliers do not yet possess the machines and factories needed to produce it and that overhead expenses involved in production have yet to be incurred. Suppose the average costs of all potential suppliers are as follows: Units Average Total Cost (Dollars Per Unit) 90,000 4 100,000 3 True or False: The requesting company can solicit lower bids by requesting 100,000 units as opposed to 90,000.
A firm produces two goods, A and B. Due to the product A’s fall in popularity near the end of last year, the estimated demand (units purchased) for A is 25% less than that of B. The selling price per unit is $30 for A and $20 for B. If the revenue target is $85,000 this year, how much of each of the two goods must be sold? (Round to whole number if necessary)
Various techniques have been proposed to curb cross-border drug smuggling into a country. The costs of implementing each strategy along a particularly rugged section of the border are indicated below. The table also includes a score that is compiled based on deterrence, interdiction, and apprehension, with a higher score indicating better performance. Determine the technique with the highest and the lowest cost-effectiveness ratio. For a budget of $53 million, determine the total cost of the most cost-effective techniques. Activity Cost, $ Score Tethered Aerostats 4.5 8 Boots-on-the-Ground 42.1 52 Fence 14.2 12 Motion Sensors 8 7 Seismic Sensors 5.6 5 Drones 12.8 26
The demand and cost function for a company are estimated to be as follows: P = 100 - Q TC = 50 + 80Q -10Q2 + 0.6Q3 What price should the company charge if it wants to maximize its profit in the short run? What price should it charge if it wants to maximize its revenue in the short run Suppose the company lacks confidence in the accuracy of cost estimates expressed in a cubic equation and simply wants to use a linear approximation. Suggest a linear representation of this cubic equation. What difference would it make on the recommended profit-maximizing and revenue-maximizing prices
Toil & Oil processes crude oil to jointly produce gasoline, diesel, and kerosene. One batch produces 3,415 gallons of gasoline, 2,732 gallons of diesel, and 1,366 gallons of kerosene at a joint cost of $12,000. After the split-off point, all products are processed further, but the estimated market price for each product at the split-off point is as follows: Gasoline $2 per gallon Diesel 1 per gallon Kerosene 3 per gallon Using the market value at split-off method, allocate the $12,000 joint cost of production to each product
A local defense contractor is considering the production of fireworks as a way to reduce dependence on the military. The variable cost per unit is $40D. The fixed cost that can be allocated to the production of fireworks is negligible. The price changed per unit will be determined by the equation p=$180-(5)D, where D represents demand in units sold per week. a.What is the optimum number of units the defense contractor should produce in order to maximize profit per week? b.What is the profit if the optimum number of units are produced?
A local defense contractor is considering the production of fireworks as a way to reduce dependence on the military. The variable cost per unit is $40D. The fixed cost that can be allocated to the production of fireworks is negligible. The price changed per unit will be determined by the equation p=$180-(5)D, where D represents demand in units sold per week. a.What is the optimum number of units the defense contractor should produce in order to maximize profit per week? b.What is the profit if the optimum number of units are produced? Show handwritten solutions
Redstone Clayworks, Inc. is located in Sedona, Arizona and manufactures clay fire pits for patios. They are one of about two dozen firms around the world that manufacture and sell clay fire pits for retailers such as Home Depot, Lowe’s, Front Gate, and other upscale home product chains. There is virtually no product differentiation. A clay fire pit is a clay fire pit. Assume that the world market demand and supply curves for clay fire pots intersects at $300 per unit. Make a spreadsheet and suppose that fire pits fall out of fashion causing prices fall worldwide to $85. How many units should the manager choose to produce? Explain.