Answered: Question 1 Suppose there is only one…

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 1

Suppose there is only one supplier in the market of product X. The following table shows partial information of product X and the supplier’s cost.

A. Determine the supplier’s profit-maximizing output quantity. Explain your answer.

B. At what price should the supplier charge to maximize its profit? Explain your answer.

C. Suppose at the profit-maximizing output quantity you have determined in part A, the average variable cost is $428.33 and the average total cost is $628.33. Calculate the total profit at the profit-maximizing output quantity.

Question 1
Suppose there is only one supplier in the market of product X. The following table shows
partial information of product X and the supplier's cost
Price
Quantity
0
Marginal Cost
$1,700
1,500
1,400
1,300
1,200
1,100
1,000
1
380
2
390
410
430
5
460
500
7
900
550
800
610
700
770
600
10
790
A. Determine the supplier's profit-maximizing output quantity. Explain your answer.
B. At what price should the supplier charge to maximize its profit? Explain your
answer.
C. Suppose at the profit-maximizing output quantity you have determined in part A,
the average variable cost is $428.33 and the average total cost is $628.33
Calculate the total profit at the profit-maximizing output quantity

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