If a firm's revenues do not cover its average variable costs, then that firm has reached its price taking point shutdown point O marginal point opportunity margin
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- Ariana Grande has just finished recording her latestCD. Her record company’s marketing departmentdetermines that the demand for the CD is asfollows:Price Number of CDs$24 10,00022 20,00020 30,00018 40,00016 50,00014 60,000The company can produce the CD with no fixed costand a variable cost of $5 per CD.a. Find total revenue for quantity equal to 10,000,20,000, and so on. What is the marginal revenuefor each 10,000 increase in the quantity sold?Assume that you are an economic consultant. The firm that hired you has provided the information below. The firm is a price searcher and wants to maximize its profit (or minimize its loss). InformationPrice: $4Elasticity of demand at price of $4 is Ed=-1Quantity of output: 2000Total variable cost: 4000Average fixed cost: 1Marginal cost is constant and equal to the average variable cost: MC=ACV=2. Which of the following answers correctly describes this case? a) The firm is maximizing profits at the current price of $4.b) The firm should increase price and reduce quantity produced.c) None of the other answersd) Firm should reduce price and increase quantity produced.Explain the roleof costs in pricingdecisions anddescribe how variouscombinations of price,fixed cost, and unitvariable cost affect afirm’s break-even point
- A firm has a linear demand function for its product. When the price of the product isSh.220, the quantity demanded is 40 units. When the price increases to Sh.240, thequantity demanded becomes 30 units. In addition, the firm’s marginal cost function isgiven by:MC = 40q – 2q2 + 2Fixed cost = Sh.5 millionWhere q = quantity demanded, MC = marginal cost (Sh. million)Evaluate the level of output that maximizes profits.A toy manufacturer makes miniature trucks. The pricep(in dollar) and the demandx(numberof miniature trucks) are related by the equation 6000−600p=x. The total cost for the sametoy manufacturer to producexminiature trucks can be modeled byC(x) = 8x+ 450.(a) (10 points) Express the pricepin terms of the demandx. Find the revenueR(x) if themanufacturer sellsxminiature trucks in a month and find the domain of this function.(b) (10 points) Graph the cost and revenue functions on the same coordinate system for 0≤x≤6000.(c) (10 points) What is the minimum number of trucks the toy manufacturer must sell tobreak even?(d) (10 points) FindP′(300) and interpret the result.(e) (10 points) What is the exact profit from the sale of the 301stminiature truck?Don't use chatgpt or any AI A profit-maximising firm in a competitive market is currently producing 1,000 units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000. a) What is its profit? b) What is its marginal cost? c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?
- don't use Al bot or chat GPT otherwise downvote Microsoft is selling a one-of-a-kind software program for which they have no competitors. The demand they face for their product is q = 1000 − 5p. Their cost function is C(q) = 1000 (Each copy of the program has zero marginal cost). How many copies do they sell? (a) q = 100 (b) q = 250 (c) q = 400 (d) q = 500 Get the answer, and explain how you got it.As a producer and seller of some commodity, you have learned that, if you produce and sell x itmes in a particular month, the following functions can be used to find the cost and revenue: Revenue: R(x)=150x-x^2 and Cost: C(x)=3000+20x. (a) Write a simplified formula for your profit in a particular month, P(x)=R(x)- C(x) (b) Find the "break-even" point(s) (c) How many items should you produce and sell in a month in order to achieve a maximum profit? (d) What is the maximum possible monthly profit? This is the problem and I cannot solve the c and d, could you please help me?Find the optimum level of output and profit from the cost function TC = 50 + 6Q2and priceP = 100 – 4QAlso derive marginal cost and marginal revenue
- A computer company produces affordable, easyto-use home computer systems and has fixed costs of$250. The marginal cost of producing computers is $700for the first computer, $250 for the second, $300 for thethird, $350 for the fourth, $400 for the fifth, $450 for thesixth, and $500 for the seventh.a. Create a table that shows the company’s output,total cost, marginal cost, average cost, variablecost, and average variable cost.b. At what price is the zero-profit point? At whatprice is the shutdown point?c. If the company sells the computers for $500, is itmaking a profit or a loss? How big is the profitor loss? Sketch a graph with AC, MC, and AVCcurves to illustrate your answer and show theprofit or loss.d. If the firm sells the computers for $300, is itmaking a profit or a loss? How big is the profitor loss? Sketch a graph with AC, MC, and AVCcurves to illustrate your answer and show theprofit or loss.A special shoe manufacturer ABC Co. has costs of production as follows and solve all the subparts: Quantity 0 1 2 3 4 5 6 Total Variable Cost ($) 0 50 70 90 140 200 360 ABC Co.’s fixed costs are $100. Calculate average fixed costs, average variable costs, average total costs and marginal costs at each level of production. Draw the company’s cost curves in a clearly labelled graph. The price of ABC shoe is $50. What are the company’s profits? In case of loss, should the CEO continue operations or decide to shut-down? Which would be a wise decision? Explain. The chief financial officer tells the CEO that it’s better to produce only one shoe this month. What could be the reason for this advice by the CFO? What are the firm’s profits at that level of production? Is this the best decision? Explain.When the price is between AVC and ATC (ATC<p>AVC), then total revenue for the competitve firm
