Microeconomics
10th Edition
ISBN: 9781259655500
Author: David C Colander
Publisher: McGraw-Hill Education
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Chapter 14.1, Problem 2Q
To determine
Explain the profit maximizing condition.
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(b) You are the CEO for a lightweight compasses manufacturer. The demand function for the lightweight compasses is given by p = 40−4q2where q is the number of lightweight compasses produced in millions. It costs the company $15 to make a lightweight compass.
(i) Write an equation giving profit as a function of the number of lightweight compasses produced.
(ii) At the moment the company produces 2 million lightweight compasses and makes a profit of $18,000,000, but you would like to reduce production. What smaller number of lightweight compasses could the company produce to yield the same profit?
The blue curve on the following graph represents the demand curve facing a firm that can set its own prices.
Use the graph input tool to help you answer the following questions. You will not be scored on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
PRICE (Dollars per unit)
100
TOTAL REVENUE (Dollars)
90
80
20
10
0
1250
1125
1000
875
750
625
500
On the previous graph, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 10,
20, 25, 30, 40, or 50 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green
points (triangle symbol) to plot the results.
375
250
125 +
0
0
0
Demand
5 10 15 20 25 30 35 40 45 50
QUANTITY (Units)
+
5
20
10 15
25 30 35
QUANTITY (Number of units)
40
Graph Input Tool
Market for Goods
45 50
Quantity
Demanded
(Units)…
Giocattolo is a profit-maximizing firm producing toy cars, which it can produce and sell in its home country, Italy, and abroad in Spain. The average cost
(AC) curve on the following graph represents Giocattolo's cost of producing toy cars within one factory, whether in Italy or in Spain.
COST (Dollars per toy car)
20
18
16
14
12
10
8
4
2
0
0
10 20 30 40 50 60 70
80
QUANTITY (Thousands of toy cars)
AC
90 100
Suppose that at the current market price of toy cars, the demand for Giocattolo's product is 10,000 toy cars per year in Italy and 20,000 toy cars per
year in Spain. (Hint: Select each point on the previous graph to see its coordinates.)
Based on Giocattolo's average cost curve, within one factory it can produce 20,000 toy cars at $
per toy car, and produce the total of 30,000 toy cars at $
per toy car.
per car, produce 10,000 toy cars at
Chapter 14 Solutions
Microeconomics
Ch. 14.1 - Prob. 1QCh. 14.1 - Prob. 2QCh. 14.1 - Prob. 3QCh. 14.1 - Prob. 4QCh. 14.1 - Prob. 5QCh. 14.1 - Prob. 6QCh. 14.1 - Prob. 7QCh. 14.1 - Prob. 8QCh. 14.1 - Prob. 9QCh. 14.1 - Prob. 10Q
Ch. 14.A - Prob. 1QECh. 14.A - Prob. 2QECh. 14.A - Prob. 3QECh. 14.A - Prob. 4QECh. 14 - Prob. 1QECh. 14 - Prob. 2QECh. 14 - Prob. 3QECh. 14 - Prob. 4QECh. 14 - Prob. 5QECh. 14 - Prob. 6QECh. 14 - Prob. 7QECh. 14 - Prob. 8QECh. 14 - Prob. 9QECh. 14 - Prob. 10QECh. 14 - Prob. 11QECh. 14 - Prob. 12QECh. 14 - Prob. 13QECh. 14 - Prob. 14QECh. 14 - Prob. 15QECh. 14 - Prob. 16QECh. 14 - Prob. 17QECh. 14 - Prob. 18QECh. 14 - Prob. 20QECh. 14 - Prob. 21QECh. 14 - Prob. 22QECh. 14 - Prob. 23QECh. 14 - Prob. 1QAPCh. 14 - Prob. 2QAPCh. 14 - Prob. 3QAPCh. 14 - Prob. 4QAPCh. 14 - Prob. 5QAPCh. 14 - Prob. 6QAPCh. 14 - Prob. 7QAPCh. 14 - Prob. 1IPCh. 14 - Prob. 2IPCh. 14 - Prob. 3IPCh. 14 - Prob. 4IPCh. 14 - Prob. 5IPCh. 14 - Prob. 6IPCh. 14 - Prob. 7IPCh. 14 - Prob. 8IPCh. 14 - Prob. 9IP
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- On the graph input tool, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 6, 12, 15, 18, 24, and 30 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. Calculate the total revenue if the firm produces 6 versus 5 units. Then, calculate the marginal revenue of the sixth unit produced. The marginal revenue of the sixth unit produced is________. Calculate the total revenue if the firm produces 12 versus 11 units. Then, calculate the marginal revenue of the 12th unit produced. The marginal revenue of the 12th unit produced is_________.arrow_forwardThe graph to the right depicts the daily total cost and total revenue curves for a firm. If the firm chooses the profit maximizing level of output, it will earn a profit of $ per day. (Round your answer to the nearest penny.) Revenue and Costs (3) 1,180 1910 624 480 48 91 118 Output (per day) TR a a Garrow_forwardTammy quit her job as a math teacher making $70,000 per year to start her own online business. The first-year revenue totaled to $200,000. During the first year of online business, Tammy paid $50,000 for the office rent and $20,000 for utilities and supplies. What is the amount of economic profit generated from Tammy’s online business?arrow_forward
- (b) You are the CEO for a lightweight compasses manufacturer. The demand function for the lightweight compasses is given by p 40 – 4q²where q is the number of lightweight compasses produced in millions. It costs the company $15 to make a lightweight compass. (1) Write an equation giving profit as a function of the number of lightweight compasses produced. (11) At the moment the company produces 2 million lightweight compasses and makes a pre of $18,000,000, but you would like to reduce production. What smaller number of lightweight compasses could the company produce to yield the same profit? Σ BIUG G |卡 三 = 9 ..arrow_forwardThe blue curve on the fallowing graph represents the demand curve facing a firm that can set its own prices. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Goods 250 225 1guantity 25 "Demanded (inita) 200 Demand Price (Dolars per unitJ 175 125.00 E 150 125 100 75 Damand 50 10 15 20 25 30 35 40 45 s0 QUANTITY (Unta) On the graph input tool, change the number found in the Quantity Demanded feld to determine the prices that correspond to the production of D, 10, 20, 25, 30, 40, and S0 units of output Calculate the total revenue for each of these production leveis. Then, on the fallowing graph, use the green paints (triangie symbol) to plot the resuts. 3130 2017 Total Revenue 2504 2191 SATE 313 15 20 25 30 35 QUANTITY (Nurber of unita) 10 40 45 50…arrow_forward11:30 l 4G I Homework 4 (section 2.1-2 & 2.2).pdf Economic Mathematics (1) Name ID Section 2.2 Revenue, cost and profit 1. If the demand function of a good is given by P-80 – 3Q, the fixed costs are 100 and variable cost are 5 per unit. Work out the profit when Q-10. 2. Find an expression for the profit function given the demand function 20+P= 25 and the 32 +5. Find the value of 0 for which the firm average cost function AC = (a) breaks even (b) makes a loss of 432 units (c) maximises profit. 2/2 !!arrow_forward
- 3 Pierce Manufacturing determines that the daily revenue, in dollars, from the sale of x lawn chairs is R(x) = 0.003x° +0.01x +0.5x. Currently, Pierce sells 70 lawn chairs daily. a) What is the current daily revenue? b) How much would revenue increase if 75 lawn chairs were sold each day? c) What is the marginal revenue when 70 lawn chairs are sold daily? d) Use the answer from part (c) to estimate R(71), R(72), and R(73). ..... a) The current revenue is $ b) The revenue would increase by $. (Round to the nearest cent.) c) The marginal revenue is $ when 70 lawn chairs are sold daily. d) R(71) - $ R(72) $ R(73) $arrow_forwardConsider the business whose Total Cost and Total Revenue for various quantities of a particular product are shown in the table below. Quantity Total Cost Total Revenue 0 100 0 1 250 500 2 350 950 3 500 1350 4 725 1700 5 1000 2000 6 1400 2250 Use the Profit-Maximizing Rule to explain the quantity that this business should produce to maximize its profits. Answer must both state the number to produce and an explanation of how you used the profit-maximizing rule to arrive at that number.arrow_forwardSuppose Felix runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market price is $20 per frying pan. The following graph shows Felix's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantities zero through seven (inclusive) that Felix produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 25 0 -25 0 1 ● ^ 2 O ☐ A ☐ A 3 4 5 QUANTITY (Frying pans) O ☐ 6 Total Cost ☐ 7 8 o Total Revenue Profit ? image 1 Calculate Felix's marginal revenue and marginal cost for the first seven frying pans he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity.arrow_forward
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