Explain should the company consider expanding capacity

Assignment Help Econometrics

Reference no: EM13205771

Night Timers is a small company manufacturing glow-in-the-dark products. One of the hottest items the engineering department has developed is adhesive tape that can be applied to walls and floors. Night Timers chief engineer anticipates that the product will be sold in ten-foot rolls. At present, the company's maximum production capacity is 140,000 rolls per year. The engineer believes the cost function to b be described by C= $50,000 + 0.25Q. Night Timers president seeks to establish a price that maximizes profit. She thinks that the firm should be able to sell at least 125,000 rolls of tape per year. The marketing manager forecasts demand for the tape to be Q = 350,000 - 200,000P.
a.) If night timers plan to sell 125,000 rolls per year , what is the necessary price if firm is to break even? What if it can sell 100,000?
b.) The marketing manager forecasts demand for the tape to be: Q = 350,000 - 200,000P. Find the firm's profit maximizing output and price.
c.) If the demand forecast in part b is realized in the first year of production, should the company consider expanding capacity? Explain.

Reference no: EM13205771

Questions Cloud

State what is the ph of a buffer solution : What is the pH of a buffer solution that is 0.10M methylamine and 0.10Mmethylammonium salt?what is the pH if 12ml of 0.20Mhcl

What is the amount of labor that the profit-maximizing firm : Suppose that for the firm below, the goods market is perfectly competitive. The market price of the product the firm produces is $4 at each quantity supplied by the firm. What is the amount of labor that this profit-maximizing firm will hire

Determine are there multiple break even points : Suppose that a firm sells in a competitive market at a fixed price of $42.50 per unit. The firm's cost function is: C = 150 + 5Q. Determine the minimum quantity at which the can break even. Are there multiple break even points

State a mechanism to account for this product : Dehydration of 2-methylcyclohexanol gives small amounts of 1-ethyl-cyclopentene. Write a mechanism to account for this product.

Explain should the company consider expanding capacity : Night Timers is a small company manufacturing glow-in-the-dark products. One of the hottest items the engineering department has developed is adhesive tape that can be applied to walls and floors. Night Timers chief engineer anticipates that the p..

Explain a radioactive isotope may change a proton : A radioactive isotope may change a proton into a neutron in an attempt to become more stable. While doing so, a particle is emitted from the nucleus of that isotope.

What is maxs most profitable course of action : Max Whitley, manager of Whitley Construction, builds new homes in a booming community in the Midwest. Although the sales have slowed down because of a national recession, it now looks as if the recession is about to end. Max wants to be ready with..

Prepare journal entries to record january transactions : Dividends during January were $3,000A. Open T accounts for each of the accounts listed in the trial balance, and enter the opening balances for 2011.B. Prepare journal entries to record each of the January transactions

State what is the ph of the resulting solution : M HNO3 is mixed with 439 mL NaOH with pH=13.97. What is the pH of the resulting solution?

User Account

All Pages