A.
To calculate: The total profit function of the firm.
A.
Answer to Problem 3E
The detailed solution with explanation is provided in the next section.
Explanation of Solution
The demand function for two classes of goods is given as;
Total Revenue for the manufactured item is,
Total Revenue for semi-manufactured item is,
Total Cost function is,
Total Profit function is,
Introduction: A mathematical relationship between the total profit and output of a firm is called profit function.
B.
To calculate: The profit maximizing level of price and output for each of the two freight categories.
B.
Answer to Problem 3E
The detailed solution with explanation is given in the next section.
Explanation of Solution
First, differentiate the total profit function with respect to the Q1
Now, we shall differentiate the total profit function with respect to the Q2
Introduction: A mathematical relationship between the total profit and output of a firm is called profit function.
C.
To calculate: The marginal revenue for each market at the given levels of output.
C.
Answer to Problem 3E
The detailed solution with explanation is given in the next section.
Explanation of Solution
Marginal Revenue in each market
Now, we shall substitute the values of output
First, we shall differentiate the total profit function with respect to the Q1
Marginal Cost for manufactured goods is $4
Now, we shall substitute the values of output
Thus, the marginal cost for semi-manufactured goods is $4
Introduction: A mathematical relationship between the total profit and output of a firm is called profit function.
D.
To Calculate: The marginal revenue for each market at the given levels of output.
D.
Answer to Problem 3E
The detailed solution with explanation is given in the next section.
Explanation of Solution
Marginal Revenue in each market
Now, we shall substitute the values of output
First, we shall differentiate the total profit function with respect to the Q1
Marginal Cost for manufactured goods is $4
Now, we shall substitute the values of output
Thus, the marginal cost for semi-manufactured goods is $4
Introduction: A mathematical relationship between the total profit and output of a firm is called profit function.
E
To calculate: The profits.
E
Answer to Problem 3E
The detailed solution with explanation is provided in the next section.
Explanation of Solution
Total Profit function is
Introduction: A mathematical relationship between the total profit and output of a firm is called profit function.
F
To calculate: The difference in profit levels between differential pricing and uniform pricing cases.
F
Answer to Problem 3E
The detailed solution with explanation is provided in the next section.
Explanation of Solution
Elasticity of demand manufactured good (E1)
Now, differentiate with respect to the price
Elasticity of demand manufactured good (E2)
Now, differentiate with respect to the price.
Introduction: A mathematical relationship between the total profit and output of a firm is called profit function.
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Chapter 14 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning