2. Suppose that you have been hired as a consultant to a firm that has estimated its demand curve to be P=600-3Q, where P denotes price in dollars and Q denotes total unit sales. The firm's cost equation is TC-3,200 +50Q + 2Q¹ Derive the equations for marginal revenue and marginal cost. Determine the dollar values for Marginal Revenue (MR), and Marginal Cost (MC) if the firm is currently producing at an output level (Q) of 75 units.
2. Suppose that you have been hired as a consultant to a firm that has estimated its demand curve to be P=600-3Q, where P denotes price in dollars and Q denotes total unit sales. The firm's cost equation is TC-3,200 +50Q + 2Q¹ Derive the equations for marginal revenue and marginal cost. Determine the dollar values for Marginal Revenue (MR), and Marginal Cost (MC) if the firm is currently producing at an output level (Q) of 75 units.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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d. How should this firm change its output to maximize profit if fixed cost changes from 3200 to 3800 (ie. TC=3800+50Q+2Q^2)
e. How should firm change its output if VARIABLE cost changes (ex. TC=3200+80Q+2Q^2)
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2. Suppose that you have been hired as a consultant to a firm that has estimated its demand
curve to be P=600- 3Q, where P denotes price in dollars and Q denotes total unit sales. The
firm's cost equation is TC= 3,200 +50Q + 2Q²
Derive the equations for marginal revenue and marginal cost.
Determine the dollar values for Marginal Revenue (MR), and Marginal Cost (MC) if the
firm is currently producing at an output level (Q) of 75 units.
Provide a recommendation to this firm if they should increase, decrease, or keep the
quantity at Q = 75 to maximize its profit (you must motivate your answer)?
How should this firm change (increase, decrease, or keep the same) its profit maximizing
quantity compared to your finding in part c if the firm's fixed cost changes from 3,200 to 3,800
so TC = 3,800 +500 +2Q² (you must motivate your answer)?
How should this firm change (increase, decrease, or keep the) its profit maximizing quantity
compared to your finding in part c if the firm's variable cost changes so TC = 3,200+80Q+
202 (you must motivate your answer)?
low
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