Question 3 (5 points): A firm producing widgets has $2000 fixed costs (e.g., rent) and $20 per- unit costs (i.e., it costs $20 to produce each additional widget). The demand function is given by 5000-50P, Q(P) 6500-100P, 0 ≤ P ≤30 30 < P≤ 65 P > 65 where P is the price of widgets and Q(P) is the amount the firm can sell as a function of price. a) (2 points) What will be the firm's profit if it sets the price P = $40 and produces as much as it can sell? b) (3 points) What will be the firm's profit if it decides to produce and sell 3600 widgets?

Question 3 (5 points): A firm producing widgets has $2000 fixed costs (e.g., rent) and $20 per- unit costs (i.e., it costs $20 to produce each additional widget). The demand function is given by 5000-50P, Q(P) 6500-100P, 0 ≤ P ≤30 30 < P≤ 65 P > 65 where P is the price of widgets and Q(P) is the amount the firm can sell as a function of price. a) (2 points) What will be the firm's profit if it sets the price P = $40 and produces as much as it can sell? b) (3 points) What will be the firm's profit if it decides to produce and sell 3600 widgets?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter3: Benefits, Costs, And Decisions

Section: Chapter Questions

Problem 3.3IP

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