The ABC Company is planning an aggressive new pricing strategy that offers its product to wholesalers at $75 per unit. While the goal is to expand sales, rather than necessarily maximize profits in the short term, it is critical that the company maintain a positive operating profit, since it cannot raise any more debt in the immediate future. Your manager would like to get a better sense of how realistic it is to recover variable costs at a price of $75, given the cost function C=45Q+3Q². How many units must the firm sell so that the average variable cost exactly equals the price of $757 O 10 0.25 0 50 150

The ABC Company is planning an aggressive new pricing strategy that offers its product to wholesalers at $75 per unit. While the goal is to expand sales, rather than necessarily maximize profits in the short term, it is critical that the company maintain a positive operating profit, since it cannot raise any more debt in the immediate future. Your manager would like to get a better sense of how realistic it is to recover variable costs at a price of $75, given the cost function C=45Q+3Q². How many units must the firm sell so that the average variable cost exactly equals the price of $757 O 10 0.25 0 50 150

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The company manufactures game tables which are sold for $60 each. To produce each game table, the company incurs $28 of variable costs and $12 of allocated fixed costs. A buyer in Puerto Rico offers to purchase 3,000 tables at $36 each. The Restoration Hardware Company has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income?
If some country's exports of long steel products are $15 billion and it imports $55 billion of the same product. Compute the intraindustry trade index and determine whether long steel trade for this country is inter or intra industry trade.
You are hired as a consultant at a revenue management firm and one of ourrecent clients wished to determine the optimum price for their consumer electronics product.The cost of the product is $100 and before retaining us, they had been selling the product at$200 because it felt like a nice round number. The current sales volume is 1000 units peryear. We examined the market preferences and buying behavior, and concluded that thiscompany’s marketplace has a price elasticity of 1 (i.e. Assume that an x% change in pricewill result in an x% change in sales volume for any x). What is the optimal price thatmaximizes total profit for this company? What are the sales volume, total revenue and totalprofit at the optimal price?
Your firm is considering adding a product line. The accounting department has determined that the cost function for this new product will be C(x) = 20x +4840 and the revenue function will be R(x) = 60x, where is the number of units sold. Additionally, the sales department has determined that you reasonably can expect to sell around 80 units. You must decide whether to go ahead with the new product line. Find the break-even quantity: Find the profit function: P(x) = Make your decision: O Cancel the product line: the quantity needed to break even is more than our firm can reasonably expect to sell. O Cancel the product line: producing these products is not profitable. O Proceed with the product line: the products are profitable and we can reasonably expect to meet our break-even quantity.
Answer the attached question
The production of store-brand medicine happens in a perfectly competitive market. For store-brand albuterol inhalers, the long-run average costs are constant at $57. Demand by retailers is given by: QD = 630 − 0.38P. In addition to those production costs, producers incur costs related to labeling their products to inform consumers that the product is comparable to name-brand inhalers. The labeling and related research costs is estimated to be equal to 1.8Q. Is there a market failure here, and if so, which one? Why or why not? What would be the quantity of inhalers produced if no labeling were required?
Please answer question 6 with details on how to do it. Thank you.
Minimization CT = W1X1 + W2X2 Hold it: Y = X11/3 X21/6 where X1 and X2 are the productive factors and W1 and W2 are their prices, respectively. Determine: If X2 = 27 and W2 = 2 a) The short-run cost function
You are the marketing manager of the Business Unit (BU) that produces polystyrene (which is an input to making lightweight rigid foam). The current Demand/Supply balance, as measured by the ICIS price, is $800 per ton of polystyrene. The BU has 2 plants and can produce a total of 1800 tons. At full capacity utilization, the BU’s average variable cost equals $1300/t and its average total cost equals $1700/t.Plant 1 has a capacity of 600 tons and a marginal cost of $900/t. Plant 2 has capacity of 1200 tons and a marginal cost of $1500/t. Due to exit of one competitor, you expect next year’s polystyrene ICIS price to increase to $1200. 1. How much volume of polystyrene do you expect to produce next year, if any? 2. What is your expected contribution margin for next year? 3. What is your expected profit for next year?
It has been determined that the cost of producing x units of a certain item is 8x + 365. The demand function is given by p = D(x) = 40 – 0.35x. %3D Step 1 of 2: Find the revenue function, Answer Keypad Keyboard Shortcuts R(x) =
PROBLEM #3 An auto parts manufacturer uses a production process for one of its parts that has a long- run production function as follows: q=20K²L, where L measures the number of labor hours and K measures the number of rental hours for the machine used in the production process. The machine can be rented for $90 per hour; the hourly wage for workers is $15. The manufacturer has a production budget of $23,220 for this type of part. If the manufacturer's goal is to maximize output, subject to the production budget, find the output-maximizing levels of capital and labor the manufacturer will choose.
Moses Inc. is a small electric company that provides power to customers in a small rural area in the Southwest. The company is currently maximizing its profits by selling electricity to consumers at a price of $0.15 per kilowatt-hour. Its marginal cost is $0.05 per kilowatt-hour, and its average cost is $0.15 per kilowatt-hour. A government regulator is considering a proposal to regulate the firm’s price at $0.05 per kilowatt-hour. Would such a policy improve social welfare? Explain