Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 2.7CE
To determine
To evaluate the losses of the airlines if it refuses the 90 seats charter flight business along with the losses whenit decides to operate and fly the charter that has been proposed.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Please answer with details on how to do it.
A small company manufactures a certain product. Variable costs are $20 per unit and fixed costs are $10,875. The price demand relationship for this product is
P = -0.25D + 250, where P is the unit sales price of the product and D is the annual demand. Total cost = fixed cost + Variable cost, TC = CF + CV
Revenue = Demand x Price, TR = D x P
Profit = Total Revenue – Total Cost, P = TR – TC
a) Develop the equations for the total cost and total revenue. Find the breakeven quantity
c) How many units must be sold to maximize profit? What is the company’s maximum profit?
Question
6. A producer can produce 2500 units of wood
parts per day at a plant located in USA.
The steady demand for wood parts is 500
units per day. The set up cost for the
equipment to the company is $ 50.00. The
annual carrying cost for the wood part is $
1.00 per unit. The facility operates 200 days a
year:
a) Calculate the optimal run size
b) Average inventory
c) Total cost of carrying + ordering per year
d) The numbers of production run per year
e) Length of a production run in days
A company produces and sells a consumer product and is able to control the demand for the product by
varying the selling price. The approximate relationship between price and demand is p= 200-0.05D
where p is the price per unit in dollars and D is the demand per month. The company is seeking to
maximize its profit. The fixed cost is $15000 per month and the variable cost is $50 per unit.
a. What is the number of units that should be produced and sold each month to maximize profit?
b. What is the domain of profitable demand during a month?
Show your spreadsheet.
Chapter 9 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Knowledge Booster
Similar questions
- Pixie Arts and Graphics, a medium scale printing press business has determined the equation that describes the relationship of the price and demand of one of its products as Price=150 - 0.01•D (D as Demand per unit) for an annual printing of this product. The fixed costs annually = P50,000 and the variable cost = P40 per unit. Requirement: a. What is the maximum profit that can be earned? b. What is the unit price at this point of optimal demand if demand is not to be anticipated to exceed more than 6,000 units annually? Hint: Profit (loss) = total revenue – total costs = (aD – bD²) – (Cf + CyD)arrow_forwardA company has established that the relationship between the sales price for one of its products and the quantity sold per month is approximately p= 75 -0.10 (D is the demand or quantity sold per month and p is the price in doilars). The fbxed cost is $1.000 per month and the variable cost is $30 per unit produced. a. What is the maximum profit per month for this product? b. What is the range of profitable demand during a month? a. The maximum profit per month for this product is S (Round to the nearest dollar.) b. The range of profitable demand during a month is from units to units. (Round up the lower limit and down the upper limit to the nearest whole number.)arrow_forwardQ)Vegemite has been recently introduced to the Chinese market. It sells for the equivalent of $2 per jar, and costs $0.50 per jar to make. The company’s fixed costs are $20,000. How many jars of vegemite need to be sold to break even?arrow_forward
- A company has established that the relationship between the sales price for one of its products and the quantity sold per month is approximately p=85-0.2D (D is the demand or quantity sold per month and p is the price in dollars). The fixed cost is $1,500 per month and the variable cost is $20 per unit produced. a. What is the maximum profit per month for this product? b. What is the range of profitable demand during a month?arrow_forward(a) How many vacuums are supposed to be sold to achieve break even? (b) If Primark wants to earn a profit of $36,000, how many vacuum must be sold?arrow_forward(a) How would one estimate the full cost to an airline if one of its planes is held over for 24 hours in an airport for repair? (b) A company has spent $10 million to develop a product for market. During the product’s first two years, the company’s profit was $6 million. In recent years, the market was flooded by rival products and now the company is reassessing its product. If it abandons the product, it can recover $2 million of its original investment by selling its production facility. If it continues to produce the product, its estimated revenues for successive two-year periods will be $5 million and $3 million and its costs will be $4 million and $2.5 million. (After four years the plant will have zero resale value.) What would be the company’s best course of action? (c) Two decades ago, the global demand and supply curves for copper were: Qd = 15-10P and Qs = -3 + 14P, where Q is measured in millions of metric tons per year. Find the competitive price and quantity. Suppose that…arrow_forward
- Air Canada announces a 15% off sale on its flights, so fans can watch Toronto Raptors play against the Golden State Warriors in the NBA Finals. What effect will this sale have on Air Canada's flights to destinations other than Canada?arrow_forwardAn Electronic Company produces calculators. The fixed cost of producing calculators is 450,000. The variable cost of producing a calculator is 100. The company sells the calculators for 250. Given an annual volume of 50,000 calculators. Determine the units to produce to cover-up the fixed cost. Determine the profit at 50,000 volume of production. Determine the amount of sales to be generated in order for the firm not to incur any profit nor loss. If price increases to 400 all costs are the same, what is the new break-even units?arrow_forwardJust 1 capsule of brand X can provide 24 hours of acid control ( Actual brand will not be named) what needs to be more clearly defined in this statement?arrow_forward
- calculate the Predicted yearly profit levelsarrow_forwardA company has established that the relationship between the sales price for one of its products and the quantity sold per month is approximately p=70 -0.2D (D is the demand or quantity sold per month and p is the price in dollars). The fixed cost is $700 per month and the variable cost is $40 per unit produced. a. What is the maximum profit per month for this product? b. What is the range of profitable demand during a month? a. The maximum profit per month for this product is $ (Round to the nearest dollar.)arrow_forwardPhilips Inc is considering investing in a new project and to estimate the consumer demand they hired a marketing consulting team. The consulting team concluded that the project is viable if the discount rate is smaller than 20%. How would you classify the cost of this marketing study? Group of answer choices Cost of debt Erosion cost Opportunity cost Sunk cost Correct answer is not availablearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
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