LSC CUMBERLAND EC202 MICRO>PKG<
21st Edition
ISBN: 9781260586992
Author: McConnell
Publisher: MCG
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Question
Chapter 19, Problem 3P
Sub part (a):
To determine
Economic and accounting profit.
Sub part (b):
To determine
The new Accounting profit and economic profit.
Sub Part (c):
To determine
The marginal revenue.
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QUESTION 19
Rex Carr could pay $10 for a shovel that lasts one year and pay $5 a car to his brother Scoop to bury the cars, or he could buy a low-quality car smasher that costs
$200 a year to own and that smashes cars at a marginal cost of $1 per car. If it is also possible for Rex to buy a high-quality hydraulic car smasher that cost $650 per
year to own and if with this smasher he could dispose of cars at a cost of $.75 per car, it would be worthwhile for him to buy this high-quality smasher if he planned to
dispose of
a. no more than 900 cars per year.
b. at least 1,810 cars per year.
c. at least 1,800 cars per year.
d. at least 900 cars per year.
e. no more than 1,800 cars per year.
3. The unit cost in peso to produce a chemically formulated product is $13 and the
fixed cost is $370. The price-demand function in dollars per unit is p=70-2D.
Determine the following;
Determine the optimal demand of this product and confirm that profit occurs at this demand.
What is the demand that will give maximum revenue of this product and how much is the total revenue?
Find the demand at which breakeven occurs and the range of profitability.
a.
b.
C.
Quantity of Gold Bars (in thousands)
Extraction Cost (in millions of dollars)
User Cost (in millions of dollars)
0
$ 10
$ 10
1
15
10
2
20
10
3
25
10
4
30
10
5
35
10
The table shows the quantity of gold bars in thousands, the extraction cost for each thousand bars (in millions of dollars), and the user cost of each thousand bars (in millions of dollars) facing the OZ Mining Company this year (all costs are marginal). If the current price of a bar of gold is $25,000, how many bars (in thousands) should OZ extract and sell this year in order to maximize profits?
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