Answered: P=3,005−10Q The cost 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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The Poster Bed Company believes that its industry can best be classified as monopolistically competitive. An analysis of the demand for its canopy bed has resulted in the following estimated demand function for the bed:

P=3,005−10Q

The cost analysis department has estimated the total cost function for the poster bed as

TC=Q33−15Q2+5Q+24,000

Short-run profits are maximized when the level of output is . and the price is ?

The total profit at this price-output level is $ ?

The point price elasticity of demand at the profit-maximizing level of output is ?

The level of fixed costs the firm is experiencing on its bed production is $ ?

What is the impact of a $5,000 increase in the level of fixed costs on the price charged, output produced, and profit generated?

Increase No Change Decrease

Price Charged ?

Output Produced ?

Profits Generated ?

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