Mad Rabbit is a manufacturer and distributer of Royalex hull wilderness canoes. Revenue and cost relations are as follows:                                                      TR = $200Q - $0.06Q2                                                      MR = DTR/DQ = $200 - $0.12 Q                                                          TC =$75,000 + $6Q + $0.0125Q2                                                     MC=  DTC/DQ = $6 + $0.025Q   Calculate output, price and profit at the average cost-minimizing activity level.     Calculate output, price and profit at the profit-maximizing activity level.    Calculate the level of output and price that will maximize sales revenue. What is the profit associated with this activity level?

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
Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition
Section: Chapter Questions
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Mad Rabbit is a manufacturer and distributer of Royalex hull wilderness canoes. Revenue and cost relations are as follows: 

                                                    TR = $200Q - $0.06Q2 

                                                    MR = DTR/DQ = $200 - $0.12 Q

 

                                                       TC =$75,000 + $6Q + $0.0125Q2 

                                                   MC=  DTC/DQ = $6 + $0.025Q

 

  1. Calculate output, price and profit at the average cost-minimizing activity level. 

 

  1.  Calculate output, price and profit at the profit-maximizing activity level. 

 

  1. Calculate the level of output and price that will maximize sales revenue. What is the profit associated with this activity level? 

 

  1.  Plot Mad Rabbit's demand curve, marginal revenue curve, marginal cost curve and average cost curve on the same graph (quantity on the horizontal axis). Show your graphical solutions (price, quantity, profit) to parts A, B and C on this graph
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