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?
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
Problem 7E
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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
- 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?
- 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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