A college wishes to produce an effigy for the student carnival. The studies prerequisites have made it possible to establish that the production of these effigies requires fixed costsof $2,008 and variable costs (materials, labour, energy) of $0.90 per effigy. One of the requirements of the college being not to make a deficit, it had a market research. It appears from this study that by selling these effigies for $3.75 we can hope to sell 1,000, whereas setting the price at $2.50 potential sales are of 3,000.
A college wishes to produce an effigy for the student carnival. The studies prerequisites have made it possible to establish that the production of these effigies requires fixed costsof $2,008 and variable costs (materials, labour, energy) of $0.90 per effigy. One of the requirements of the college being not to make a deficit, it had a market research. It appears from this study that by selling these effigies for $3.75 we can hope to sell 1,000, whereas setting the price at $2.50 potential sales are of 3,000.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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80
3.
4
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000
000
market research. It appears from this study that by selling these effigies for $3.75 we can
hope to sell 1,000, whereas setting the price at $2.50 potential sales are
of 3,000.
C
A college wishes to produce an effigy for the student carnival. The studies
prerequisites have made it possible to establish that the production of these effigies requires
fixed costsof $2,008 and variable costs (materials, labour, energy) of $0.90 per
effigy. One of the requirements of the college being not to make a deficit, it had a
a) Express the demand in terms of the selling price and represent
graphically this function.
b) Express the cost of production in terms of the selling price.
c) Express the income in terms of the selling price and determine the price that the
college should set to maximize income from this sale of effigies.
d) Represent on the same system of axes the income function and the cost function
and determine the prices corresponding to the break-even points and number
effigies which will then be sold.
e) Express the profit as a function of the selling price and represent graphically
this function.
f) Determine the price the college should set to maximize the profit from this
sale.
A
6
Expert Solution
Step 1
Given information
Fixed cost of producing effigy=$2008
Variable cost=$0.90 per effigy
When
Selling price=$3.75, Q=1000
Selling price=$2.50, Q=3000
Step by step
Solved in 5 steps with 4 images
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