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
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Question
Chapter B, Problem 8E
a.
To determine
To evaluate thelevel of newspaper and magazine advertising that maximizes the firm’s sales.
b.
To determine
To evaluate thefirm’s sales at the optimal values of newspaper and magazine advertising determined in part (a).
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Bounds Inc. determined through regression analysis that its sales (S) are a function of the amount of advertising (measured in units) in two different media. This relationship is given by the following equation (X = newspapers, Y = magazines):
S (X, Y) = 200X+100Y− 10X2− 20Y2 + 20XY
Find the level of newspaper and magazine advertising that maximizes the firm’s sales.
Calculate the firm’s sales at the optimal values of newspaper and magazine advertising determined in part (a).
The marginal profit for a certain company is MP₁(x) = -x² + 18x-45. The company expects the daily production level to rise from x = 3 to x = 5 units. The
management is considering a plan that would have the effect of changing the marginal profit to MP₂(x)= -x² +14x-33. Should the company adopt the plan?
Determine the area between the graphs of the two marginal profit functions from x = 3 to x = 5. Interpret this area in economic terms.
C
Should the company adopt the plan that would make the marginal profit be MP₂?
O A. Yes, because the company will make a larger profit under the new plan.
B.
No, because the company's profit will be smaller under the new plan.
O C. It is impossible to tell using the given information.
The area between the graphs of the two marginal profit functions from x = 3 to x = 5 is
sq. units.
The demand function for a tablet is given by the model P= 200-16x2 where p is measured in dollars per tablet and x is measured in millions of tablets. If it costs $50 to produce each tablet and a profit of $125 million was derive when 2.5 million tablets were produced. Derive the number of tablets that the company could sell to make the same amount of profit?
Chapter B Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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