Consider the following cost and pricing data of ABC Corp. on its Product X: Price: P120.00.per unit Profit Contribution: P00.00 Proposed additional Cost P3 per unit (for quality improvement) Current Profits: P2.4 million Sales: 100,000 units. 1. Assuming that average variable costs are constant at all output levels, find ABC Corp.'s total cost function before the proposed change. 2. Calculate the total cost function if the quality improvement is implemented. 3. Calculate ABC Corp.'s break-even output before and after the change, assuming it cannot increase its price. 4. Calculate the increase in sales that would be necessary with the quality improvement to increase profits to P2.7 million.

Consider the following cost and pricing data of ABC Corp. on its Product X: Price: P120.00.per unit Profit Contribution: P00.00 Proposed additional Cost P3 per unit (for quality improvement) Current Profits: P2.4 million Sales: 100,000 units. 1. Assuming that average variable costs are constant at all output levels, find ABC Corp.'s total cost function before the proposed change. 2. Calculate the total cost function if the quality improvement is implemented. 3. Calculate ABC Corp.'s break-even output before and after the change, assuming it cannot increase its price. 4. Calculate the increase in sales that would be necessary with the quality improvement to increase profits to P2.7 million.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

AMCO is a firm producing tables in Spain. It has a fixed cost of 100$ and a cost per unit of production of 2$. The demand function for a table is given by: P = 60 - 4Q 1. Find the equations of TR and TC. 2. Write down the equation of the profit. 3. Find Qwhen TR = 0 (x-intercept/roots). 4. Find Qwhen TR is a maximum. 5. Deduce the maximum total revenue (TR max).
What is the demand function and cost function based on the set of data below? Price Quantity Profit $50 88 -$240 $25 289 -$240 $80 -$2000 $52 148 $1256 $51 143 $1003 $55 103 $575
Please help with g.
Please help with f.
show complete solution on paper
Answer the last two parts which is •Calculate the break even and profit maximizing levels of output and Price • what is the relationship between price, marginal revenue and own Price elasticity of demand at the profit maximizing point
Q2.The management of an ‘Electronic Goods’ manufacturing company asked you to give an advice about changing its current production plan, given the following information:- Annual production plan of computers is 4200 computers.- Total cost of production is OMR 824000.- Fixed cost is OMR 320000.- Revenue function: R = 460.2Q – 0.05Q2 1-Use the above information to formulate the price function and the total cost function, and determine the following: 1) Profit-maximizing quantity.2) Profit-maximizing price.3) Maximum profit value.4) Revenue-maximizing quantity. 2-Should the company change its current annual production plan of computers in order to maximize its profit?
The Lead Zeppelin Company produces powered and steerable lighter-than-air craft. The company’s airships are specially lined and are therefore safer than normal dirigibles. The table below shows the weekly production of dirigibles, along with the associated Average Cost and Total Revenue figures (the Average Cost and Total Revenue figures are actually in thousands of dollars, so the $15 represents $15,000, but we have left off the zeros to save space). Quantity Average Cost Total Cost Total Revenue 0 -- 0 $0 1 $15 15 $10 2 $9 18 $20 3 $8 24 $30 4 $8.50 34 $40 5 $9 45 $50 6 $10 60 $60 7 $12 84 $70 The Lead Zeppelin Company has decided that it will produce at least 1 dirigible. Now the question becomes, how many more dirigibles should it produce to make as much profit as possible? Use the profit-maximizing rule to explain how many dirigibles the Lead Zeppelin Company should produce to…
BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. 4.00 3.50 Monopoly Outcome 3.00 2.50 Profit ATC 2.00 Loss 1.50 1.00 MC 0.50 MR 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 QUANTITY (Thousands of cans of beer) Suppose that BYOB charges $2.50 per can. Your friend Dmitri says that since BYOB is a monopoly with market power, it should charge a…
Tex has a small plant that produces storm windows. Its total revenue function is ?? = 5.4?, and the total cost function is ?? = 30 + 3? + 0.03?2 What is the profit maximizing output for Tex? Show your work. What is his selling price? How much profit is he making? Now assume that Tex has fixed costs of only 5. With this different information, answer parts (a) and (b). How have fixed-cost changes influenced Tex's production decisions? Now assume that Tex has fixed costs of 55. How would your answer change to part (c)?
Demand function is given by Q=84-2P and cost function is C(q)=25+2q+q2 1) What are the qualitative features of the costs of this cost function? i.e. average, marginal, variable, properties, and what are the key prices – shut price, breakeven price, revenue maximizing and profit maximizing price? 2) Using this cost structure and demand - how many firms are likely to operate in the long run (note: that in the long run firms tend to operate close to minimum average cost)?
A boutique chocolate manufacturer produces 2 types of chocolate, Dark chocolate, and Milk chocolate daily with a total cost function: TC = 7D + D x M + 3M where: D is the quantity of the Dark chocolate (in kgs) and M is the quantity of the Milk chocolate (in kgs). The prices that can be charged are determined by supply and demand forces and are influenced by the quantities of each type of chocolate according to the following equations: PD = 20-D + 5M for the price (in dollars per kg) of the Dark chocolate and PM 23 + 3D - M for the price (in dollars per kg) of the Milk chocolate. The total revenue is given by the equation: TR = PD XD + PM × M and the profit given by the equation Profit = TR-TC First, use a substitution of the price variables to express the profit in terms of D and M only. Using the method of Lagrange Multipliers find the maximum profit when total production (quantity) is restricted to 2023 kgs. Note D or M need not be whole numbers. Be sure to show that your solution…