The average cost and average revenue functions for a particular brand of mobile phone are given by the equationsAC = 15 + 8000Q and AR = 25(a)Write down the equations for TR, TC, MR, MC.(b)How many mobile phones must be made and sold to break even?(c)Write down the equation of the profit function. Show, by differentiation, that neither profit nor revenue ever reach a maximum. Use MR and MC to explain why there is no maximum.(d)Plot the graphs of TR, TC and the profit function on one diagram. Plot MR and MC on a separate diagram. Comment on the relationship between the two diagrams.

Given information:- AC = 15 + 8000Q AR = 25 Write down the equations for TR, TC, MR, MC. TC = AC…

Answered: The average cost and average revenue…

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 average cost and average revenue functions for a particular brand of mobile phone are given by the equations

AC = 15 + 8000Q and AR = 25

(a)Write down the equations for TR, TC, MR, MC.
(b)How many mobile phones must be made and sold to break even?
(c)Write down the equation of the profit function. Show, by differentiation, that neither profit nor revenue ever reach a maximum. Use MR and MC to explain why there is no maximum.
(d)Plot the graphs of TR, TC and the profit function on one diagram. Plot MR and MC on a separate diagram. Comment on the relationship between the two diagrams.

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