You are the manager of a firm that produces furniture. All your clients are in Kumasi (K) and Accra (A).Suppose the monthly inverse demand function for your furniture in in Accra and Kumasi combined is P= 1200 - 4Q. Because of prohibitive cost of transporting furniture between Accra and Kumasi, you setup two plants, one in each town. The cost of producing furniture at each facility is given by CA (QA ) =8000 + 6QA² and Ck(@k) = 8000 + 6Qk² where Q = Qa + Qk and Qa and Qk are the quantity of furnitureproduced at Accra and Kumasi respectively. Determine the profit maximizing amounts of electricity toproduce in the two facilities, the optimal price and the profit.

It is a profit maximization problem with 2 plants at different locations. Profit will be maximized…

Answered: You are the manager of a firm that…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter9: Applications Of Cost Theory

Section: Chapter Questions

Problem 3E

See similar textbooks

Similar questions

Suppose that you can sell as much of a product (in integer units) as you like at $60 per unit. Your marginal cost (MC) for producing the qth unit is given by: MC = 7q This means that each unit costs more to produce than the previous one (e.g., the first unit costs 7*1, the second unit (by itself) costs 7*2, etc.). If fixed costs are $80, what is the optimal integer output level? Please specify your answer as an integer. If fixed costs are $80, what is the profit at the optimal integer output level? Please specify your answer as an integer.
You should create a spreadsheet to answer this and the following six questions. Your U.S. based company exports drendles to the rest of the world. The world market for drendles is highly competitive (so competitive that changes in production in the United States do not impact the world price). The current price of a drendle is €100/drendle. Your company's cost function is C(q)=50,000 + 50q +0.02q2 in U.S. dollars. If the exchange rate is 1.20$/€. How much profit (in $US) does your firm make? Round your answer to the nearest penny. Numeric Response If the exchange rate is 1.172$/€. How much profit (in $US) does your firm make?
A small business woman has realized that for one of her products, if the price per unit is GH¢20 she can sell 300 units a day. On the other hand, if the price per unit is reduced to GH¢13, she can sell 440 units a day. From the accounting records, her accountant has estimated the fixed cost of production as GH₵2,000 with a variable cost per unit of GH¢10. (i). Find an expression relating price and output assuming it is linear. (ii). State the total cost function, assuming it is linear. (iii) Advise the business woman on the level of production at which she will breakeven.
Suppose that the monthly cost, in dollars, of producing x chairs is C(x)=0.005x³ +0.07x² +19x + 700, and currently 35 chairs are produced monthly. a) What is the current monthly cost? b)What is the marginal cost when x = 35? c) Use the result from part (b) to estimate the monthly cost of increasing production to 37 chairs per month. d)What would be the actual additional monthly cost of increasing production to 37 chairs monthly? a) The current monthly cost is $ (Round to the nearest cent as needed) b) The marginal cost when x = 35 is $ per item. (Round to the nearest cent as needed.) c) Use the result from part (b) to estimate the monthly cost of increasing production to 37 chairs per month. The monthly cost in increasing production to 37 chairs monthly is $ (Round to the nearest cent as needed) d) The actual additional monthly cost of increasing production to 37 chairs monthly is $ (Round to the nearest cent as needed.)
Best Orange Juice Company is located in Oman. The cost function for total orange juice production (x) is given by C(q) 3D0.25x². Their orange juice is demanded only in Muscat (Muscat demand is Xm= 100-2Pm) and Salalah (Salalah demand is 100-4P,). Therefore, the total demand is x-St Xs. If the company can control the quantities supplied to each market, how many should it sell in each location to maximize total profits? What price would it charge in each location? Answer
It is known that a certain company sells each kg of the product it manufactures at $80, it is also known that the total manufacturing cost "CT" is given by the function CT=(1/1000)x2 +100 , where "x" are the kg of product produced. a) How many units of "x" must the company sell to break even? Value = 100 points.b) How many units of "x" is the optimal quantity that should be sold to optimize the producer's profit? Value = 100 points.c) How many monetary units does that optimal profit for producers amount to? (remember, you will have to prove it mathematically either by the method of the first or by the method of the second derivative). Value = 100 points.
Pepper farming is carried out in a greenhouse. Proceeds from the sale of pepper, R,dollars per square meter is determined by the following function. R = 5T (1-e^-x) where T is the temperature set in the greenhouse (Celsius, C^0)and the amount of fertilizer per square meter (kilogram, kg) the costs are as follows: fertilizer cost per square meter is 20?, heating cost is 0.10^2.According to this information a) type the profit function of the manufacturer,?(?, ?).B) determine the end points of the profit function.c) show which endpoints you specify or which ones give the highest amount of fertilizer with the temperature value that makes the profit.
A large company in the communication and publishing industry has quantified the relationship between the price of one of its products and the demand for this product as Price=160−0.02×Demand for an annual printing of this particular product. The fixed costs per year (i.e., per printing)=$47,000 and the variable cost per unit=$40. What is the maximum profit that can be achieved? What is the unit price at this point of optimal demand? Demand is not expected to be more than 4,000 units per year. The maximum profit that can be achieved is $? (Round to the nearest dollar.) The unit price at the point of optimal demand is $? per unit.
Q#3: XYZ construction are manufactures of slabs and are the major suppliers for orange train in Lahore. XYZ is manufacturing two types of slabs. The cost for these two types of slabs are $175 and $225, respectively. XYZ current production capacity is 200 slabs (both types). Because of the urgency of the need, government of the Punjab would pay the manufacture a bonus of $50,000 plus an additional $25 for each of the unit greater than 200. Determine the function which determine the sales of the number of slabs provided of each type by XYZ construction. What is the expected profit if XYZ is manufacturing 150 slabs of type 1, and 250 slabs of type IL
Your automobile assembly plant has a Cobb-Douglas production function given by =x0.4 0.6, q = x where q is the number of automobiles it produces per year, x is the number of employees, and y is the daily operating budget (in dollars). Annual operating costs amount to an average of $29,000 per employee plus the operating budget of $365y. Assume that you wish to produce 4,000 automobiles per year at a minimum cost. How many employees should you hire? (Round your answer to the nearest employee.) X employees X =
The price-demand equation and the cost function for the production of table saws are given, respectively, by x 12,000 - 40p and C(x) = 98,000 + 70x, where x is the number of saws that can be sold at a price of Sp per saw and C(x) is the total cost (in dollars) of producing x saws. Complete parts (A) through (H) below. (A) Express the price p as a function of the demand x. (x-12000) The price function is p= -40 (B) Find the marginal cost. The marginal cost is 70 (C) Find the revenue function. (x-12000) The revenue function is R(x) = -40 (D) Find the marginal revenue. (12000-x) The marginal revenue is 40 (E) Find R'(1.500) and R'(4.500) and interpret these quantities. Find and interpret R' (1.500). Select the correct choice below and fill in the answer boxes within your choice. (Simplify your answers) A. R'(1.500) = 287 5 at a revenue of S per saw, saw production is increasing at the rate of per dollar.
A firm's average cost (AC) per unit of output depends on the number of hours of skilled labor (S) and the number of hours of unskilled labour (U) employed in the production process. The firm's AC function is defined below. Determine the quantities of the two inputs that will result in production at the lowest possible average cost and determine the associated minimum average cost. AC = 3S2 + 2U2 - 2SU - 2S - 6U + 20

SEE MORE QUESTIONS

Recommended textbooks for you

Managerial Economics: Applications, Strategies an…

Economics

ISBN:

9781305506381

Author:

James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:

Cengage Learning