ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Question
Q1. Given cost function
f(x) = 1/2(c)(x2), where c>0,
and
y(z) = z-a, where a > 1
a). Compute
b). Draw a diagram showing marginal cost and marginal revenue
c). Find price and output that maximize profits
d). Find the markup (price divided by marginal cost). Does it increase or decrease based on elasticity of demand?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- 1. A company has estimated that its total cost (TC) function is: TC = 12,000 + 60Q Where Q refers to quantity. The marketing department of this company is unable to estimate the demand function for the company but believes the price elasticity for the company's products is (-)4. Given this information, calculate the profit maximising pricearrow_forwardThe demand curve for product a is given as Q = 2000 - 20P. a. How many units will be sold at $10? b. At what price would 2,000 units be sold? 0 units? 1,500? c. Write equations for total revenue and marginal revenue (in terms of Q). d. What will be the total revenue at a price of $70? What will be the marginal revenue? e. What is the point elasticity at a price of $70? f. If price were to decrease to $60, what would total revenue, marginal revenue, and point elasticity be now? g. At what price would elasticity be unitary?arrow_forwardA firm faces the demand schedule p = 120 - 3q and the total cost schedule TC = 120 + 36q+1.2q² a. Write out the total revenue (TR) function in terms of q. b. Find the marginal revenue function. Find the marginal cost function. d. Find the profit-maximizing output using information in parts (a), (b) and (c) above. e. Write down the firm's profit function (). Simplify. f. Use the profit function to find the profit maximizing output. g. Verify that your answer in part (f) is a maximum. h. What is profit at the profit-maximizing output?arrow_forward
- Consider a form that is participating in this market (refer to P, Q (firm quantity), ATC, and AVC in the table below). Graphically illustrate this firm, graph the ATX, AVC, MC, and demand curves and calculate the total revenue, total cost, total fixed cost, total variable cost, and profit for this firm. identify the profit case. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardThe demand function of dog breeders for electric dog polishers is qb = max{200−p, 0}, and the demand function of pet owners for electric dog polishers is qo = max{90 − 4p, 0}. (a) At price 150, what is the price elasticity of dog breeders’ demand for electric dog polishers? (it's a negative number) (b) At price 15, what is the price elasticity of pet owner’ demand for electric dog polishers? (it's a negative number) (c) Find a nonzero price at which there is positive total demand for dog polishers and at which there is a kink in the demand curve. $_____. What is the market demand function for prices below the kink. What is the market demand function for prices above the kink? ______ + Parrow_forwardFeedback Imagine that the flat-screen TV market is made up of one large firm that leads the industry and sets its own price first, and another firm that follows the leader when deciding its own profit-maximizing strategy. The leader has a cost function of c₁ (91) = 5q1, and the follower has a cost function of CF (ar) = 4, where Q =q₁ + qr. Total market demand for flat-screen TVs is given by the function Q = 250.00-2p. Calculate the following values: Leading firm's production: q = Follower firm's production: qp = Equilibrium price: p= $49.37 9 OF 16 QUESTIONS COMPLETED 118.33 32.92 (Round to two decimals if necessary.) (Round to two decimals if necessary.) (Round to two decimals if necessary.) See Hint 4 VIEW SOLUTION SUBMIT ANSWERarrow_forward
- A) Find the price function and then the TR function. B) Write the MR and MC functions below. Remember: MR = dTR/dQ and MC = dSTC/dQ. C) What positive value of Q will maximize total profit? Remember: setting MR = MC and solving for Q will give you the Q that maximizes total profit. The value of Q you get should not be zero or negative.arrow_forwardE.g.1: A demand function is given by the equation P = 24 6lnQ ➤ Find the equation of TR (total revenue) and determine for which value of Q is TR maximised. Find MR (marginal revenue) as a function of Q Show that MR is a positive decreasing, concave up function.arrow_forwardAssume a firm is producing at a quantity where marginal cost is higher than marginal revenue. Which of the following is true? 1) To maximize profit. the firm should produce a lower quantity. 2) To maximize profit, the firm should produce a higher quantity. 3) The firm is currently maximizing profit. 4) To maximize profit, the firm should double production.arrow_forward
- Suppose you own fast food takeaway shops, one in Glebe, with lots of competition, and one in Tibooburra, with little competition. In Glebe, the price elasticity of demand is -2.5, while in Tibooburra, it is -2.0. Assume the marginal cost of providing a combo burger is $10. What are the optimal prices of a combo burger in each location?arrow_forwardConsider a market with the following demand curve: Q^d=1000-Yxp Assume the marginal cost of the only firm supplying this market as MC=Q/2 A.Derive an expression of elasticity of demand in terms of Y. Show your work B.Derive an expression for the slope of the isoprofit curve of this firm in terms of Y. Explain. |c.Now derive an expression for the markup chosen by this firm in terms of Y. d.What happens to the elasticity (part a) and the markup (part c) if Y goes up? What can you say about the relationship between elasticity and the markup from this observation? Explain. e.calculate the profit-maximizing quantity andarrow_forwardd) Consider a demand curve given by P = AQ 0.25 where P and Q represent price and quantity demanded respectively, and A is a positive constant. Show that the price elasticity of demand is constant, for all values of4, and is always equal to 4. Find the marginal revenue function and sketch the demand curve and its associated marginal revenue curve.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education