Suppose that the cost of producing q appliances is C(q) = 500 – 4q + q? and the demand functionis given by p = 14 – 2 q. The quantity that minimizes the average cost function and thecorresponding price are g= 22.36 and p= -30.72a) Why the corresponding price is negative? explainThe maximum profit would be -473b) Why the maximum profit is minus? explain what happens

The term “profit” is defined as an excess of total revenue (TR) over the total cost (TC). The…

Suppose that the cost of producing q appliances is C(q) = 500 – 4q + q? and the demand function is given by p = 14 –2 q. The quantity that minimizes the average cost function and the corresponding price are q= 22.36 and p= -30.72 a) Why the corresponding price is negative? explain The maximum profit would be -473 b) Why the maximum profit is minus? explain what happens

Suppose that the cost of producing q appliances is C(q) = 500 – 4q + q? and the demand function is given by p = 14 –2 q. The quantity that minimizes the average cost function and the corresponding price are q= 22.36 and p= -30.72 a) Why the corresponding price is negative? explain The maximum profit would be -473 b) Why the maximum profit is minus? explain what happens

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.2P

See similar textbooks

Similar questions

) A company manufacturing laundry sinks has fixed costs of $100 per day but has totalcosts of $2,500 per day when producing 15 sinks. The company has a daily demand functionof q = 360 − p, where q is the number if laundry sinks demanded and p is te price ofa laundry sink. Find a function for the average cost of this company. (c) If production increases continuously, what is likely to be the average cost per sink? (d) How many laundry sinks will the company need to produce in order to maximise it′s profits? (e) What is the maximum profit?
A company manufacturing laundry sinks has fixed costs of $100 per day but has totalcosts of $2,500 per day when producing 15 sinks. The company has a daily demand functionof q = 360 − p, where q is the number if laundry sinks demanded and p is te price ofa laundry sink. ) If production increases continuously, what is likely to be the average cost per sink? How many laundry sinks will the company need to produce in order to maximise it′s profits? What is the maximum profit?
Revenue and Cost The total weekly revenue functionfor a certain digital camera is given by R = 550xdollars, and the total weekly cost function for thecameras is C = 10,000 + 30x + x2dollars, where xis the number of cameras that are produced and sold.a. Find the profit function.b. Find the number of cameras that gives maximumprofit.c. Find the maximum possible profit.
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.
What is relationship between total revenue (TR) and total cost (TC) if the price is equal (tangent to the minimum) to ATC (is TR greater, less, or equal to TC)? What do we call this point?
(3) A company manufacturing laundry sinks has fixed costs of $100 per day but has total costs of $2,500 per day when producing 15 sinks. The company has a daily demand function of q = 360 − p, where q is the number if laundry sinks demanded and p is te price of a laundry sink. a) If we assume that the total cost per day is linearly related to the amount of sinks produced in a day, derive the total cost function of the company? b) Find a function for the average cost of this company.
company manufacturing laundry sinks has fixed costs of $100 per day but has totalcosts of $2,500 per day when producing 15 sinks. The company has a daily demand functionof q = 360 − p, where q is the number if laundry sinks demanded and p is te price ofa laundry sink.(a) If we assume that the total cost per day is linearly related to the amount of sinksproduced in a day, derive the total cost function of the company?(b) Find a function for the average cost of this company.(c) If production increases continuously, what is likely to be the average cost per sink?(d) How many laundry sinks will the company need to produce in order to maximise it′s profits?(e) What is the maximum profit?
Q. 4 For a firm with a Total Cost function TC = C(Q), recall that the definitions of Marginal Cost (MC) and Average !3! Total Cost (ATC) are given as follows: Marginal Cost (MC) = C'(Q) Average Total Cost (ATC) = C(Q)/Q Prove that the marginal cost is equal to the average total cost (MC = ATC) when the average total cost is at its minimum value. (Hint: By using the definition of average cost function, find the quantity that minimizes it by applying unconstraint optimization. Show that the FOC of the minimization problem implies that MC=ATC has to be satisfied at the minimum level of average cost.)