What equation reflects the firm marginal cost function

Assignment Help Business Economics
Reference no: EM133129214

A firm with market power has estimated the following demand function for its product: Q = 12,000 - 4,000P, where P = price per unit and Q = quantity demanded per year. The firm's total annual costs are $4,000 when nothing is being produced. These costs increase by 50 cents for each unit produced.

a) What equation reflects the firm's total cost function?

b) What equation reflects the firm's marginal cost function?

c) Assuming the firm's objective is to maximize profit, determine:

  • The quantity of output it should produce
  • The price it should charge
  • The annual profit it will make

d) Given the price calculated in (c), what is the markup over AVC at the optimal production level?

e) If the price elasticity of the firm's product is -1.4, calculate the optimal price to charge using the Mark-up Pricing Formula?

Reference no: EM133129214

Questions Cloud

How government can intervene to correct the problem : Suppose you are watching a cricket match and a persona sitting near you starts smoking. The smoke is making you feel ill.
SCOM 110 Media and Culture Assignment : SCOM 110 Media and Culture Assignment Help and Solution, Liberty University - Assessment Writing Service
Foundation for a strong economic recovery : With reference to the business cycle and the AD/AS model, explain whether the Coronavirus has caused the economy to be in a recessionary or expansionary period.
Explain pros and cons of each potential solution : Explain the pro's and con's of each potential solution, citing relevant theory and evidence from the textbook and outside references.
What equation reflects the firm marginal cost function : A firm with market power has estimated the following demand function for its product: Q = 12,000 - 4,000P, where P = price per unit and Q = quantity demanded pe
How much is the total investment cost per company : Assuming you have the savings to invest in 3 companies with a total amount of P100,000. How much is the total investment cost per company
Observed unethical situation : Share a time in your professional life where you observed an unethical situation. What were your thoughts and opinions on this ethical issue?
How does staffing strategically link to performance : What is the interview process look like for strategic staffing? How does staffing strategically link to performance?
What is the depreciation expense that should be recognized : The facilities, purchased on January 1, 2020, for 7,500,000, had been depreciated. What is the depreciation expense that should be recognized

Reviews

Write a Review

Business Economics Questions & Answers

  Exchange rate to rise-ceteris paribus

Say that the exchange rate between the U.S. dollar and the Melnik bop is expressed in terms of bops per dollar. All of the following will cause this exchange rate to rise, ceteris paribus, except for:

  What is the competitive equilibrium price per ride

In 2000, the town of Brother’s Bay in Door County Wisconsin had a more-or-less free market in boat services. Any adult citizen could provide boat services as long as the drivers and the boats satisfy certain safety standards. What is the competitive ..

  Events represents a shift in the demand curve

Explain whether each of the following events represents a shift in the demand curve or a movement along the demand curve. Draw your answer.

  How inequality and corruption affect the economy

How does crime,poverty, income inequality and corruption affect the economy?

  What organizational structure is appropriate for business

What organizational structure is most appropriate for a business that is involved in an industry where a global strategy is most appropriate and why?

  Horizontal merger-brand myopic and diseconomies of scale

Fully Explain each of these terms with an example. Dansby-Willig Performance Index, Horizontal merger, Herfindahl-Hirschman Index (HHI), Perfect competition, Brand myopic, Diseconomies of scale.

  Differences between ricardian theory-specific factors model

Briefly discuss the differences between the Ricardian Theory, Specific Factors Model and Heckscher-Ohlin Theory of Trade.

  House at the time of its sale

How much equity would she have had in the house at the time of its sale.

  Net exports and solve for the level of aggregate demand

Mr.A makes $50,000 a year and pays $10,000 in taxes. Ms.B makes $30,000 a year and pays $6,000 in taxes. Find the tax rate and after tax income for each of them. Identify what type of tax this is. Find the net exports and solve for the level of aggre..

  How many major wireless phone handset manufacturers

How many major wireless phone handset manufacturers are there? Please address all five questions in your response. How many major wireless phone handset manufacturers are there? What is the market structure? What pricing strategies do wireless phone ..

  Economic base theory and the new growth theory

Explain how Economic Base Theory and the New Growth Theory differ in their answers to that question.

  Underemployment and excessive current account deficit

U.S. is currently suffering from underemployment and excessive current account deficit. What measures can U.S. take to move away from its present situation towards internal and external balance? Consider rules of Bretton Woods and policy tools.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd