Bavarian Crystal Works designs and produces crystal wine decanters for export to international markets. The marketing manager of Bavarian Crystal Works estimates the demand curve for each month to be: P=1,000-0.0025Q where Q is the number of wine decanters produced annually. Bavarian Crystal Works also pays a lease for its factory and equipment every month in the amount of $1,000,000. Finally, the cost to produce each wine decanter is $200. What is the marginal revenue at 40,000 units? If Bavarian Crystals is currently producing 40,000 units would you recommend they increase their production?
Bavarian Crystal Works designs and produces crystal wine decanters for export to international markets. The marketing manager of Bavarian Crystal Works estimates the demand curve for each month to be: P=1,000-0.0025Q where Q is the number of wine decanters produced annually. Bavarian Crystal Works also pays a lease for its factory and equipment every month in the amount of $1,000,000. Finally, the cost to produce each wine decanter is $200. What is the marginal revenue at 40,000 units? If Bavarian Crystals is currently producing 40,000 units would you recommend they increase their production?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Bavarian Crystal Works designs and produces crystal wine decanters for export to international markets. The marketing manager of Bavarian Crystal Works estimates the
P=1,000-0.0025Q
where Q is the number of wine decanters produced annually.
Bavarian Crystal Works also pays a lease for its factory and equipment every month in the amount of $1,000,000. Finally, the cost to produce each wine decanter is $200.
What is the marginal revenue at 40,000 units?
If Bavarian Crystals is currently producing 40,000 units would you recommend they increase their production?
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