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: Cengage Learning
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Textbook Question
Chapter 11, Problem 2E
Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one large firm—Tile King. Ajax produces a multiheaded tunnel wall scrubber that is similar to a model produced by Tile King. Ajax decides to charge the same
- Compute the marginal cost curve for Ajax.
- Given Ajax’s pricing strategy, what is the marginal venue function for Ajax?
- Compute the profit-maximizing level of output for Ajax.
- Compute Ajax’s total dollar profits.
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PakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q2 and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$.
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Bosch claims to be the leader in terms of energy efficiency in the washing machine market and produces a special-design motor that is used in the manufacturing of its washing machines. The market demand and the total cost for Bosch’s washing machines are estimated as follows:
P = 3,200 – 0.20Q
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In this equation, Q is the number of washing machines sold per month, P is the TL price of washing machines, TCMotor is Bosch’s total cost of manufacturing the special-design motors in TL.
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The Poster Bed Company believes that its industry can best be classified as monopolistically competitive. An analysis of the demand for its canopy bed has resulted in the following estimated demand function for the bed:
P=3,005−10Q
The cost analysis department has estimated the total cost function for the poster bed as
TC=Q33−15Q2+5Q+24,000
Short-run profits are maximized when the level of output is . and the price is ?
The total profit at this price-output level is $ ?
The point price elasticity of demand at the profit-maximizing level of output is ?
The level of fixed costs the firm is experiencing on its bed production is $ ?
What is the impact of a $5,000 increase in the level of fixed costs on the price charged, output produced, and profit generated?
Increase No Change Decrease…
Chapter 11 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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