A firm is planning to manufacture a new product. As the selling price is increased, the quantity that can be sold decreases. Numerically the sales department estimates: P $350-0.2Q where P-selling price per unit; Q-quantity sold per year. On the other hand, management estimates that the average unit cost of manufacturing and selling the product will decrease as the quantity sold increases. They estimate C S40Q+ $20,000 where C= cost to produce and sell0 per year. a) Write the total revenue relation. b) The firm's management wishes to maximize profit. What quantity should the decision makers plan to produce and sell each year and what profit c) At what annual quantity of production will the company breakeven

A firm is planning to manufacture a new product. As the selling price is increased, the quantity that can be sold decreases. Numerically the sales department estimates: P $350-0.2Q where P-selling price per unit; Q-quantity sold per year. On the other hand, management estimates that the average unit cost of manufacturing and selling the product will decrease as the quantity sold increases. They estimate C S40Q+ $20,000 where C= cost to produce and sell0 per year. a) Write the total revenue relation. b) The firm's management wishes to maximize profit. What quantity should the decision makers plan to produce and sell each year and what profit c) At what annual quantity of production will the company breakeven

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A firm is planning to manufacture a new product. As the selling price is increased, the quantity
that can be sold decreases. Numerically the sales department estimates: P $350-0.20 where
P-selling price per unit; Q-quantity sold per year. On the other hand, management estimates that
the average unit cost of manufacturing and selling the product will decrease as the quantity sold
increases. They estimate C S40Q+ $20,000 where C= cost to produce and sell0 per year.
%3D
a) Write the total revenue relation.
b) The firm's management wishes to maximize profit. What quantity should the decision
makers plan to produce and sell each year and what profit
c) At what annual quantity of production will the company breakeven

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