The price/demand function of a company is p=36-0.001D and the cost function is 20D+1000. Determine the following: 1. The optimal demand = Blank 1 units 2. The optimal value = $Blank 2 3. The demand that will give the highest revenue = Blank 3 units 4. The highest revenue value = $ Blank 4 5. Breakeven Points = Blank 5 and Blank 6 units 6. Range of Profitability = From Blank 7 to Blank 8 units
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- The economic analysis division of Mapco Enterprises has estimated the demand function for its line of weed trimmers as QD=18,000+0.4N350PM+90Ps where N=numberofnewhomescompletedintheprimarymarketarea PM=priceoftheMapcotrimmerPS=priceofitscompetitorsSurefiretrimmer In 2010, 15,000 new homes are expected to be completed in the primary market area. Mapco plans to charge $50 for its trimmer. The Surefire trimmer is expected to sell for $55. What sales are forecasted for 2010 under these conditions? If its competitor cuts the price of the Surefire trimmer to $50, what effect will this have on Mapcos sales? What effect would a 30 percent reduction in the number of new homes completed have on Mapcos sales (ignore the impact of the price cut of the Surefire trimmer)?AVAC is the only pharmaceutical firm producing a Vaccine. The Demand Curve for its product is Qd = 250 – 50 P where P is Price and Q are packs of vaccines in ‘000 Total Cost Function estimated by the firm is TC = 15 + 0.5Q where Q is monthly output. What is the market structure of AVAC? State its characteristics. To maximize profit. What will be the optimum price and how many packs of Vaccine should the firm produce and sell per month? If this number of packs is produced and sold, what will be the firm’s monthly profit? Using available information, draw AVAC’s demand, marginal revenue and marginal cost curves in a graph and clearly label the firm’s profit maximizing price, quantity and profit. Do you observe any welfare loss? If so, also indicate and label the area on the graph. Assume all other pharmaceutical firms in the market start producing the Vaccine and the market becomes competitive. What will be the impact on price and marginal revenue? Would the market…A firm with market power faces the following estimated demand and average variable cost functions: Qd = 39,000 − 500P + 0.4M −8,000PR AVC = 30 − 0.005Q + 0.0000005Q2 where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. What is the profit-maximizing choice of output(hint: derive the total revenue function first based on the demand function and the formula TR=P*Q)? a. 0 units, the firm shuts down b. 8,000 units c. 12,000 units d. 16,000 units e. 10,000 units
- A local defense contractor is considering the production of fireworks as a way to reduce dependence on the Military. The variable cost per unit is $ 40D. The fixed cost that can be allocated to the production of fireworks is negligible. The price charge per unit will be determined by the equation p= 180-5(D), where D represent demand in unit 1) What is the optimal number of units the defense contractor should produce in order to maximize profit per week? 2) What is the profit if the optimal number of unit produced?ABC Company Limited is a new business established to produce tables (in units). The demand function for tables is given as 4? = 35 − 0.5?. It has been estimated that the total fixed cost is GH¢80 and average variable cost function is 3? − 51 + 320, where Q is number of tables produced ? and P is the price per table (in GH¢). Given this information, what is the total profit at the profit maximizing level of output, and what is the best pricing policy option?You have been promoted to be the new manager of Nefertiti Hotel, and you must decide where to build a new hotel. The finance department believes that Morocco is the better option due to the tax benefits of $5 million, while the marketing department estimates the present value of gross operating profits to be only $10 million in Morocco compared to $14 million in Tunisia. If it costs $15 million to build the hotel in either location, would it be more profitable to build in Morocco or Tunisia? If the hotel is located in Morocco, what would the firm's economic profits be?compute, show solution, explain
- AVAC is the only pharmaceutical firm producing a Vaccine. The Demand Curve for its product is Qd = 250 – 50 P where P is Price and Q are packs of vaccines in ‘000 Total Cost Function estimated by the firm is TC = 15 + 0.5Q where Q is monthly output. What is the market structure of AVAC? State its characteristics. To maximize profit, What will be the optimum price and how many packs of Vaccine should the firm produce and sell per month? If this number of packs is produced and sold, what will be the firm’s monthly profit? Using available information, draw AVAC’s demand, marginal revenue and marginal cost curves in a graph and clearly label thefirm’s profit maximizing price, quantity and profit. Do you observe any welfare loss? If so, also indicate and label the area on the graph. Assume all other pharmaceutical firms in the market start producing the Vaccine and the market becomes competitive. What will be the impact on…A competitive firm sells its product at a price of $0.10 per unit. Its total and marginal cost functions are: TC = 5 - 0.5Q + 0.001Q2 where TC is total cost ($) and Q is output rate (units per time period). a] Determine the output rate that maximizes profit or minimizes losses in the short term.has established that the relationship between the price for one of its products is approximately. In addition there is a fixed cost of $45,000 per year and the variable cost to manufacture the product is $45 per unit. What level of demand maximizes the total revenue? Ans. is Blank 1. What level of demand maximizes the total profit for this product? Ans. is Blank 2. Blank 1_____________ Blank 2_____________
- Spinners World is a fitness equipment company that manufactures spin bikes.The market research department recommends that the company manufacture a new model of spin bikes and presents the following demand equation x = 35000-50p, where x is the demand at $p per bike. (a) Solve the demand equation for p. The financial department also provides the cost function C(x)= 8,000+200x. (b) Analyse the revenue and profit function to produce x bikes while Identifying what the marginal revenue and the marginal profit equation signifies. (c) Determine the exact and approximate revenue from manufacturing the 31st spin bike.– A certain cleaning company cleans professional offices and believes its staff can clean up to 300 office units a week at a labor and supply cost of $58 per unit. Preliminary pricing surveys indicate that if that if the company charges $100 per unit, it will have clients for 300 units. For every $5 price increase it can expect a demand of 10 fewer units. Assume the demand, s, is a linear function of price p. Find an equation for demand as a function of price. Find the Revenue and Cost functions, both of which are dependent on price p. Write the Profit function. Using Desmos, graph the Revenue, Cost, and Profit functions on the same coordinate plane. Label the axes and the functions and use an appropriate scale. Find the break-even points graphically and confirm algebraically. Label the regions of profit and loss on the graph. Algebraically find the price that results in a maximum profit. Conclusion: A price of $_________ results in a quantity of _____________ units…A company has determined that the price and the monthly demand of one of its products are related by the following equation: Q = 300 - p. The associated fixed costs are $1,500 per month and the variable costs are $100 per unit. What is the maximum profit? What is the range of profitable demand?