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Bavarian Crystal Works designs and produces lead crystal wine decanters for export to international markets. The production manager of Bavarian Crystal Works estimates total and marginal production costs to be aq0 to oinge14 Isina TC = 10,000 + 40Q + 0.0025Q² and vibr to lavsi ai oi i xhOLteca nolyiutioie MC = 40 + 0.005Q/rim s drol ese noite eidT nidaki noilasimixam benistie where costs are measured in U.S. dollars and Q is the number of wine decanters pro- duced annually. Because Bavarian Crystal Works is only one of many crystal produc- ers in the world market, it can sell as many of the decanters as it wishes for $70 apiece. Total and marginal revenue are jianad tan ssim it of vtvios io bni TR = 70Q o atoibnut ad teva and MR = 70 where revenues are measured in U.S. dollars and Q is annual decanter production. a. What is the optimal level of production of wine decanters? What is the marginal revenue from the last wine decanter sold? b. What are the total revenue, total cost, and net benefit (profit) from selling the opti- mal number of wine decanters? c. At the optimal level of production of decanters, an extra decanter can be sold for $70, thereby increasing total revenue by $70. Why does the manager of this firm not produce and sell one more unit?

Bavarian Crystal Works designs and produces lead crystal wine decanters for export to international markets. The production manager of Bavarian Crystal Works estimates total and marginal production costs to be aq0 to oinge14 Isina TC = 10,000 + 40Q + 0.0025Q² and vibr to lavsi ai oi i xhOLteca nolyiutioie MC = 40 + 0.005Q/rim s drol ese noite eidT nidaki noilasimixam benistie where costs are measured in U.S. dollars and Q is the number of wine decanters pro- duced annually. Because Bavarian Crystal Works is only one of many crystal produc- ers in the world market, it can sell as many of the decanters as it wishes for $70 apiece. Total and marginal revenue are jianad tan ssim it of vtvios io bni TR = 70Q o atoibnut ad teva and MR = 70 where revenues are measured in U.S. dollars and Q is annual decanter production. a. What is the optimal level of production of wine decanters? What is the marginal revenue from the last wine decanter sold? b. What are the total revenue, total cost, and net benefit (profit) from selling the opti- mal number of wine decanters? c. At the optimal level of production of decanters, an extra decanter can be sold for $70, thereby increasing total revenue by $70. Why does the manager of this firm not produce and sell one more unit?

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter7: Production, Costs, And Industry Structure
Section: Chapter Questions
Problem 11RQ: What is die difference between accounting and economic profit?
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Bavarian Crystal Works designs and produces lead crystal wine decanters for export to international markets. The production manager of Bavarian Crystal Works estimates total and marginal production costs to be aq0 to noiinseu14 Isind TC = 10,000 + 40Q + 0.0025Q² and ivibe to l9v9i ani oi -MC = 40 + 0.005Q1oriism s Arol else noitee eaidT aigie s niged sW noilesimixam benistie iton to laval orfs.ot doagee sideixav, where costs are measured in U.S. dollars and Q is the number of wine decanters pro- duced annually. Because Bavarian Crystal Works is only one of many crystal produc- ers in the world market, it can sell as many of the decanters as it wishes for $70 apiece. Total and marginal revenue are tanad tan ait oT vtivins to briTR = 700 owd io anoilanut ed teoo where revenues are measured in U.S. dollars and Q is annual decanter production. a. What is the optimal level of production of wine decanters? What is the marginal revenue from the last wine decanter sold? and MR = 70 %3D b. What are the total revenue, total cost, and net benefit (profit) from selling the opti- lansmal number of wine decanters? c. At the optimal level of production of decanters, an extra decanter can be sold for $70, thereby increasing total revenue by $70. Why does the manager of this firm not produce and sell one more unit?
Transcribed Image Text:Bavarian Crystal Works designs and produces lead crystal wine decanters for export to international markets. The production manager of Bavarian Crystal Works estimates total and marginal production costs to be aq0 to noiinseu14 Isind TC = 10,000 + 40Q + 0.0025Q² and ivibe to l9v9i ani oi -MC = 40 + 0.005Q1oriism s Arol else noitee eaidT aigie s niged sW noilesimixam benistie iton to laval orfs.ot doagee sideixav, where costs are measured in U.S. dollars and Q is the number of wine decanters pro- duced annually. Because Bavarian Crystal Works is only one of many crystal produc- ers in the world market, it can sell as many of the decanters as it wishes for $70 apiece. Total and marginal revenue are tanad tan ait oT vtivins to briTR = 700 owd io anoilanut ed teoo where revenues are measured in U.S. dollars and Q is annual decanter production. a. What is the optimal level of production of wine decanters? What is the marginal revenue from the last wine decanter sold? and MR = 70 %3D b. What are the total revenue, total cost, and net benefit (profit) from selling the opti- lansmal number of wine decanters? c. At the optimal level of production of decanters, an extra decanter can be sold for $70, thereby increasing total revenue by $70. Why does the manager of this firm not produce and sell one more unit?
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