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 = 1760 - 12QThe cost analysis department has estimated the total cost function for the poster bed asTC = (1/3)Q3 - 15Q2 + 5Q + 24,000a. Calculate the level of output that should be produced to maximize short-run profits. b. What price should be charged? c. Compute total profits at this price-output level. d. Compute the point price elasticity of demand at the profit-maximizing level of output. e. What level of fixed costs is the firm experiencing on its bed production? f. What is the impact of a $5,000 increase in the level of fixed costs on the price charged, output produced, and profit generated?

In a production process, the cost structure indicates 40+3Q as the extra cost as a result of manufacturing an additional unit of output; while the component of cost regardless of the amount of output produced is $18. Given that the demand function is Qp = 600 – 3P in which Q represents quantity while P refers to price, (i) Express the total revenue function (TR) and the total cost function (TC) with respect to Q. (ii) Express the profit function (II) in terms of Q. (iii) Determine the level of output when the production is at the break-even point. (iv) Determine the profit-maximizing level of output and price. (v) Sketch a graph illustrating the relationship between II and Q.

Attempt all questions. Q1. a) A local Pepsi company has total costs of production given by the equation TC-500+10q+Sq2. This implies that the firm's marginal cost is given by the equation MC 10+10q. The market demand for cold drink is given by the equation QD-105 (1/2)*P. Write the equations showing the company's average total cost and average variable cost and average fixed cost, each as a function of q. Show the firm's MC, ATC and AVC on one graph. What is the breakeven price and breakeven quantity for this firm in the short run? What is the shutdown price and shutdown quantity for this firm in the short run? If the market price of the output is $50, how many units will this firm produce? iv) Assuming the cold drink industry is perfectly competitive, what output would be produced by the firm in long-run equilibrium? What would be the long-run equilibrium price? i) ii)

AMCO is a firm producing tables in Spain. It has a fixed cost of 100$ and a cost per unit of production of 2$. The demand function for a table is given by: P = 60 - 4Q 1. Find the equations of TR and TC. 2. Write down the equation of the profit. 3. Find Qwhen TR = 0 (x-intercept/roots). 4. Find Qwhen TR is a maximum. 5. Deduce the maximum total revenue (TR max).