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A company's revenue function can be defined as; TR= Price (P) x Quantity Demanded (Q). If the ordinary demand function for your firm is Q = 75 -0.4P where Q is monthly output: a. What is the total revenue function for this firm in terms of Q? b. What is the average revenue function for this firm in terms of Q? What is the MR function for this firm in terms of Q? C.

A company's revenue function can be defined as; TR= Price (P) x Quantity Demanded (Q). If the ordinary demand function for your firm is Q = 75 -0.4P where Q is monthly output: a. What is the total revenue function for this firm in terms of Q? b. What is the average revenue function for this firm in terms of Q? What is the MR function for this firm in terms of Q? C.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Managerial Econ - Required Homework for Module 1 Problem 1: A company's revenue function can be defined as; TR = Price (P) × Quantity Demanded (Q). If the ordinary demand function for your firm is Q = 75 -0.4P where Q is monthly output: a. What is the total revenue function for this firm in terms of Q? b. What is the average revenue function for this firm in terms of Q? C. What is the MR function for this firm in terms of Q? d. Show that MR will be less than AR for any positive level of Q. Why is that? e. What is the quantity level that maximizes total revenue? What is the price? Problem 2: Your company's cost function (monthly) can be defined as; TC: cost per unit (AC) × quantity supplied (Q). If the cost per unit (average cost) for your firm is AC = (800/Q) – 10 +2Q: a. What is the total cost function for your firm in terms of Q? b. How would you interpret the intercept term in this function? c. What is the marginal cost function for your firm? d. At what level of output (Q) is AC minimized? e. Is MC always less than AC? = f. Combine the total revenue function from problem 1 and total cost function from this problem and derive the profit-maximizing level of output and the price that would be charged. g. Why is the output level at this point smaller than the output level that maximizes total revenue? Problem 3: Squeak eClean produces commercial sanitizer used to clean tanker trucks that haul liquid food products such as milk. This sanitizer a commodity like any other and at the wholesale level, there are many domestic and foreign producers that compete vigorously. Suppose you have the following estimated market demand and supply functions for the sanitizer. Qd = 248.08 +2.2Y-0.6Pc+ 1.2 Ps - 4P 1
Transcribed Image Text:Managerial Econ - Required Homework for Module 1 Problem 1: A company's revenue function can be defined as; TR = Price (P) × Quantity Demanded (Q). If the ordinary demand function for your firm is Q = 75 -0.4P where Q is monthly output: a. What is the total revenue function for this firm in terms of Q? b. What is the average revenue function for this firm in terms of Q? C. What is the MR function for this firm in terms of Q? d. Show that MR will be less than AR for any positive level of Q. Why is that? e. What is the quantity level that maximizes total revenue? What is the price? Problem 2: Your company's cost function (monthly) can be defined as; TC: cost per unit (AC) × quantity supplied (Q). If the cost per unit (average cost) for your firm is AC = (800/Q) – 10 +2Q: a. What is the total cost function for your firm in terms of Q? b. How would you interpret the intercept term in this function? c. What is the marginal cost function for your firm? d. At what level of output (Q) is AC minimized? e. Is MC always less than AC? = f. Combine the total revenue function from problem 1 and total cost function from this problem and derive the profit-maximizing level of output and the price that would be charged. g. Why is the output level at this point smaller than the output level that maximizes total revenue? Problem 3: Squeak eClean produces commercial sanitizer used to clean tanker trucks that haul liquid food products such as milk. This sanitizer a commodity like any other and at the wholesale level, there are many domestic and foreign producers that compete vigorously. Suppose you have the following estimated market demand and supply functions for the sanitizer. Qd = 248.08 +2.2Y-0.6Pc+ 1.2 Ps - 4P 1
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