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- For the toatl revenue equation R(q)=1000+1000q-8q^2 how does the second order sufficient condition establish that there is a maximum total revenue? What is the quantity where total revenue is maximized?Agnes, a General Manager in XXX Company, estimated a multiplicative demand function of the form: using a cross-section data collected in the company sales on 30th June, 2019. The estimation results are as follows: Constant Price(P) Income (I) Price of other Good (Po) Estimated coefficient 0.022 -0.223 1.354 0.133 Standard Error 0.012 0.056 0.502 0.814 t-statistic (1.19) (-3.98) -2.69 -0.13 Number of Observations, n=210; R-squared= 0.7516 Critical Students t=1.96 at 5% Level of Significance Write down the estimated demand equation Interpret the coefficients and value Describe any three managerial decisions that can be applied by the manager from the estimated demand functionAn entrepreneur named Khadijah has total revenue shown by the equation TR = 150Q - 5Q² and total costs shown by the equation TC = 20 - 10Q. Determine the amount of output that must be produced by Khadijah to get the maximum profit and what is the maximum profit from that amount of output. Prove that the value obtained is the maximum!
- The PepsiCo Sales Executive would benefit from understanding cross elasticity of demand and also for evaluating a recommnedation to lower the price of Doritos because the good quality of product increases it demand in the market. It shows monopoly after a long time due to quality standards and price. (i) The understanding of cross elasticity of demand and elasticity of demand support better decision-making by a mutual decision making by the team mates and upper management of the company. It is a joint decision after a fair discussion over the topic.Engro Foods (Pvt) Ltd. is a FMCG manufacturer in Pakistan. Its main products are milk, icecream, and flavored juices. Last year the company has sold around 8 million units of milk, 5million units of ice-cream and 3 million units of flavored juices. The average current marketprice of the milk is Rs.100; the ice-cream is 60; and the Juices is Rs.40.In an attempt to improve revenue, the managers of the company have decided to increase allprices by 5%. Market research has suggested that the price elasticity of demand for eachproduct is: Milk: (-) 1.5; Ice-cream: (-) 1.0; Flavored juices: (-) 0.5You are required to calculate, evaluate and suggest the planned price change on followingsituations.a. Would a 5% price increase have been better for some or all of the products?b. Would a 5% price reduction have been better for some or all of the products?c. Should the company retain their current market price? If yes then why? If not thenwhy not?d. How Engro Foods (Pvt) Ltd. can maximize their…d = annual demand for a product in units p = price per unit Assume that a firm accepts the following price-demand relationship as being a realistic represenation of its market: d = 800 - 10p; where p must be between $20 and $70. How many units can the firm sell at the $20 per unit price? And $70 per unit price? By how many units does a $1 increase decrease the demand?
- If company A manufactures t-shirts and sells them to retailers for US$9.80 each.It has fixed costs of $2625 related to the production of the t-shirts, and the production cost perunit is US$2.30. Company B also manufactures t-shirts and selll them directly to consumers. The demand for its product is p = 15 − x/125 , its production cost per unit is US$5.00 i (i) Derive the total revenue function,R(x) for company B.(ii) Derive the profit function,Π(x) for company B.(ii) How many t-shirts must company B sell to in order to break-even.(iv) How many t-shirts must company B sell to maximise its profit.A major South African city generates electricity and sells it to its consumers. The city faces competition from independentrenewable power producers who also have licences to sell electricity to the public. The city however has cost advantagesdue to its size, but it is concerned of the political and economic ramifications of raising its tariffs, in these uncertaineconomic times. As a result, it is highly likely that tariffs will remain unchanged over the next financial year. The city’smarginal revenue is given as R3 000, and its costs are given as follows:TC = R82 000 + R1 000 + 0.01q2 MCMC= R1 000 + R0.02q4.1 Assess the efficiency arguments in favour of and against the renewable energy generation in SouthAfricaA herbal tea producer company has 24 different products in the market, each are produced in one of the 3 factories owned by the company. The weights of the products in monthly sales may vary depending on time of the year (demands of certain products shift to others in each of the 4 seasons), age of the products and market conditions, but yearly aggregate demand has a very strong correlation with the price of the product (Here, we ignore any other factor and assume that the yearly aggregate demand is directly and linearly effected by the price). The company found out that when the price for a packet of 20 herbal tea bags is 10 TL, yearly demand is 337500 packets. When the price increases to 11 TL, demand decreases to 337125 packets. On the cost side, the company has 1200000 TL of yearly administrative costs regardless of the price or the number of units sold, including the rents, depreciation of the buildings and other related assets and salaries of 58 workers (average monthly salary…
- When MR falls to 0 then AR becomes maximum True/FalseGiven: Qd = 800 - 4P Qs = 8P - 400 What is the Arc Elasticity where P = 150 and P = 100?A company produces and sells luxury goods and is able to control the demand for the product by varying the selling price. The relationship between price and demand is found to be: p=10-(42/D^2)+2Dwhere p is the price per unit in million dollars and D is the demand per year. The company is seeking to maximize its profit. The fixed cost is $59 million per year and the variable cost is $25 million per unit. The production capacity is 42 units per year, and the company produces at least 1 unit per month. 1) What is the company’s range of profitable output per year?
