What is the optimal level of production of wine decanters

Assignment Help International Economics

Reference no: EM13206760

Bavarian Crystal Works designs and produces lead crystal wine decanters for export to international markets. The production manager of Bavarian Crystal Works estimates total and marginal production costs to be

TC = 10,000 + 40Q + 0.0025Q2
and
MC = 40 + 0.005Q

where costs are measured in U. S. dollars and Q is the number of wine decanters produced annually. Because Bavarian Crystal Works is only one of many crystal producers in the world market, it can sell as many of the decanters as it wishes for $50 a piece. Total and marginal revenue are

TR = 50Q and MR = 50

where revenues are measured in U. S. dollars and Q is annual decanter production.
a. What is the optimal level of production of wine decanters? What is the marginal revenue from the last wine decanter sold?
b. What are the total revenue, total cost, and net benefit (profit) from selling the optimal number of wine decanters?
c. Is the optimal profit in answer b good enough to keep Bavarian Crystal Works in the market? Please comment on it.

Reference no: EM13206760

Questions Cloud

Demonstrate the relationship between supply and demand : Acres, whose grandmother gave her a family recipe for making pies, loved to cook, and she decided to staft a business she called Mrs. Acres Homemade Pies. The company produces specialty pies and sells them in local supermarl

Describe events encountered in books read as possible : Describe events encountered in books read as possible or not possible. B. Describe events as likely or unlikely (e.g., It is likely to snow today.

What is the speed of the water in the river : What is the speed of the water in the river, and what is the speed of the boat relative to the water?

How many were on roller blades : Math Sarah saw a bunch of kids riding bicycles and skating on roller blades. She told her mother that she saw 62 wheels and 16 kids. How many of the kids were riding bicycles and how many were on roller blades?

What is the optimal level of production of wine decanters : where costs are measured in U. S. dollars and Q is the number of wine decanters produced annually. Because Bavarian Crystal Works is only one of many crystal producers in the world market, it can sell as many of the decanters as it wishes for $50 ..

With what velocity does the sandbag strike the ground : Neglect air resistance and use g = 32 feet per second per second for the acceleration due to gravity. With what velocity does the sandbag strike the ground?

Analyze causes of anorexia in hospitalized patients : Provide three patient scenarios that commonly result in decreased food intake during prolonged hospitalizations. For each scenario:

How much will the population increase in the first 10 years : Area of base Height. Where P is the number in the population at time t years after some starting date. How much will the population increase in the first 10 years?

Determine what your minimum monthly payment will be : Assume that when you graduate you will owe a total of $29,500 in student loans. Assume that the interest rate is 7.5%, compounded monthly, and that the entire amount must be repaid within 10 years. Determine what your minimum monthly payment will ..

User Account

All Pages