How much profit or loss can the manager expect to earn

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Reference no: EM1315473

Q. Ever Klein Pool Services provides weekly swimming pool maintenance in Atlanta. Dozens of firms provide this service. The service is standardized; each company cleans the pool also maintains the proper levels of chemicals in the water. The service is typically sold as a four- month summer contract. The market price for the four-month ser-vice contract is $115. Ever Klein Pool Services has fixed costs of $3,500. The manager of Ever Klein has estimated the subsequent marginal cost function for Ever Klein, using data for the last two yrs:

0.42Q + 0.0021Q2?SMC = 125

where SMC is measured in dollars also Q is the number of pools serviced each summer.

a. Given the estimated marginal cost function, Illustrate what is the average variable cost function for Ever Klein?

b. Should the manager of Ever Klein continue to operate, or should the firm shut down? Elucidate.

c. The manager of Ever Klein finds two output levels which appear to be optimal (i.e. solutions of a quadratic function). Illustrate what are these levels of output also which one is actually optimal?

d. Given the optimal output in c, Elucidate how much profit (or loss) can the manager of Ever Klein Pool Services expect to earn?

Reference no: EM1315473

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