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- 2. A firm can produce up to 500 units each week. If its average cost function is C(x) = 500/x + 1500 and its total revenue function is given by: R(x) = 1600x − x^2 • What production maximizes profit? What is the maximum profit for that production level? • What production makes the profit equal to zero? (that point is called the break-even point) 3. The joint cost (in thousands of euros) for two products X and Y can be given by the following formula: C(x, y) = 40 + y^2 + 3x + 2xy + (x^2) y + y^3 where x represents the quantity of product X that is produced and y represents the quantity of product Y produced. • If 12 units of product X and 20 units of product Y are produced, what are the marginal costs? • What product line should be expanded in the current level of production?Suppose you are the manager of a watchmaking firm operating in a competitive market. Your cost of production is given by: C= 200 + 2Q2, where Q is the level of output and C is the total cost. a) If the price of watches is $100, how many watches should you produce to maximize profits?b) What will be your profit level?c) At what minimum price will the firm produce a positive output?Q1.The following is a Cobb-Douglas production function: Q = 1.75K0.6L0.5. What is correct here? * -This production function displays constant returns to scale -This production function displays increasing returns to scale -A one-percent change in L will cause Q to change by one percent -This production function displays decreasing returns to scale Q2. For studying demand relationships for a proposed new product that no one has ever used before, what would be the best method to use? * -consumer surveys, where potential customers hear about the product and are asked their opinions -double log functional form regression model -ordinary least squares regression on historical data -market experiments, where the price is set differently in two markets
- Total output Total Cost 0 20 1 30 2 42 3 55 4 69 5 84 6 100 7 117 How much milk will Malik as an individual firm would supply in the market at the price of Rs. 14 per liter? How will the supply of milk be effected if the price rises to Rs. 16 per liter?a. At a product price of $56.00 (i) Will this firm produce in the short run? Yes (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? Profit- maximizing output = 8 units per firm (iii) What economic profit or loss will the firm realize per unit of output? Profit per unit = $ 62.96 b. At a product price of $41.00 (i) Will this firm produce in the short run? Yes (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? Profit-maximizing output = 6 units per firm (iii) What economic profit or loss will the firm realize per unit of output? Loss per unit = $ 39 c. At a product price of $32.00 (i) Will this firm produce in the short run? No (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? Non applicable output = 0 units per firm iii) What economic profit or loss will the firm realize per unit of output? Total…1- Use the total cost (TC) schedule that is presented in the table below to determine the optimal rate of production when the firm can sell all of the output it produces at a price of $10 per unit. Also determine the level of profit (or loss) that the firm will experience at this level of output. Q 0 1 2 3 4 5 6 7 8 9TC $ 5 7 8 10 14 20 28 38 50 72
- You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 78 − 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 3Q1 and MC2 = 2Q2 How much output should be produced in plant 1 to maximize profits? What price should be charged to maximize profits? Please show work for all three questions What price should be charged to maximize revenues?1. If profit is maximum at sales of 700 units, does the firm have no choice but to limit sales at this level? Explain your answer. 2. A business firm produces and sells a particular Variable cost is P30/unit. Selling price is P40 per unit. Fixed cost is P60,000. a. What is the break-even quantity and break-even point? Show your solution. 3. A manager makes the statement that output should be expanded as long as average revenue exceeds average Does this strategy make sense? Explain. 4. Suppose that the steel firm’s costs are shown below: Complete the table and determine the optimal output to be Price of steel P17 per unit. Output (Q) TFC TVC TC MC TR MR Profit/Loss 0 500 0 1 500 50 2 500 90 3 500 140 4 500 200 5 500 270 6 500 350 7 500 450…A firm has access to two production processes with the following marginal cost curves: MC1 = 0.25x and MC2 = 6+0.1y, where output in production process 1 is x, output in production process 2 is y and hence total output produced is Q = x+y. Show your work to answer the following questions. (i) If it wants to produce 20 units of output, how much should it produce with each process? (ii) If it wants to produce 38 units of output, how much should it produce with each process? (iii) If it wants to produce 108 units of output, how much should it produce with each process?
- H3. In a perfectly competitive market, a firm’s production in the market described as Q = f(X) = 5X0.5 , where the final product of that firm per unit $20 and the raw material of that product per unit $5. a- much raw material will use by the firm to maximize the profit? b-How much final product will produce by the firm? c-What will be the firm’s profitSuppose a firm has the following cost: Output (units): 10 11 12 13 14 15 16 17 18 19 Total cost: $50 $52 $56 $62 $70 $80 $92 $106 $122 $140 a. If the prevailing market price is $14 per unit, how much should the firm produce? b. How much profit will it earn at the output rate? c. If it increases output by 2 units, will it make more profit or less?Which returns to scale will an efficient firm choose? What market structure has no loss in long run? What production function shows the maximum quantity of goods or services that can be produced with a set of inputs assuming one of the inputs used remains unchanged? Capacity planning refers to adjustment in production considering the what? What can destroy monopoly position?
