You are the manager of a firm that produces output in two plants. The demand for your firm's product isP= 26 2Q, where Q=Q1+Q₂2. The total costs associated with producing in the two plants areCi(Q₁)=5+1.5Q and C₂ (22) = 10 +22How much output should be produced in plants 1 and 2 in order to maximize profits?Q₁22What is the monopoly price?$What are their maximum profits using both plants? $Suppose the firm has already built plant 1 and the fixed cost of production is sunk. But, plant 2 has not yet beenbuilt yet, the fixed cost of production are not sunk.If they use only plant 1, what is their maximum profit? $Should the firm build the second plant?

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P=26-2Q, where Q Q1+Q2. The total costs associated with producing in the two plants are Ci(Q1)=5+1.5Q and C₂(Q2) = 10+Q² How much output should be produced in plants 1 and 2 in order to maximize profits? Q₁ 4 Q2 What is the monopoly price?$ What are their maximum profits using both plants? $ Suppose the firm has already built plant 1 and the fixed cost of production is sunk. But, plant 2 has not yet been built yet; the fixed cost of production are not sunk. If they use only plant 1, what is their maximum profit? $

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P=26-2Q, where Q Q1+Q2. The total costs associated with producing in the two plants are Ci(Q1)=5+1.5Q and C₂(Q2) = 10+Q² How much output should be produced in plants 1 and 2 in order to maximize profits? Q₁ 4 Q2 What is the monopoly price?$ What are their maximum profits using both plants? $ Suppose the firm has already built plant 1 and the fixed cost of production is sunk. But, plant 2 has not yet been built yet; the fixed cost of production are not sunk. If they use only plant 1, what is their maximum profit? $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6.
Suppose that the Travnikar Corporation manufactures widgets. Analysts that work for the company have found a function C(x) which reports the cost to produce x widgets and a function R(x) which reports the total revenue from selling x widgets. Currently, the company is producing 500 widgets, but the analysts find that R'(500)=85 and C'(500)=79. In order to maximize profits, should the analysts recommend increasing or decreasing production?
A firm's profit function is T(q) = R(q) – C(q) = 40q – (35 + 20q + - 10q²). What is the positive output level that maximizes the firm's profit (or minimizes its loss)? What is the firm's revenue, variable cost, and profit? Should it operate or shut down in the short run? The output level at which the firm's profit is maximized is q =. (Enter your response as a whole number.) At this level of output, the firm's revenue (R) is $ (Enter your response as a whole number.) At the profit-maximizing level of output, the firm's variable cost (VC) is $ - (Enter your response as a whole number.) Profit (T) is $ (Enter your response as a whole number and include a minus sign if necessary.) The firm should produce in the short run.
2. A local business has asked an economic development consultant to help it decide if it can continue to compete with the other businesses in a city's downtown area in a very competitive market. Using historical data on costs, the consultant finds that the total cost function for this business is TC = 10 + Q + .1Q² where Q is amount of output this business produces. Given this TC function, we know that the marginal cost (MC) of production is P = 1+.2Q. a. What are the fixed costs for this business? What is the business's variable cost function? What is the average total cost function? b. Calculate the level of output and the price of a unit of output in long run equilibrium. Sketch a graph of your solution (you do not need to precisely graph the ATC function, you just need to include a plausible version of it). c. Currently, the price of the product is $2.50 because of a recession that has hit the area. The consultant thinks the shop should immediately cease operations. Would you agree…
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In a fishery the long-run harvest function (harvest volume) is H(E) = aE – bE², with a, b representing positive constants and E is fishing effort. - Total cost is TC(E)= cE,with c being the unit cost of effort. Total revenue is TR(E) = pH(E), with p being the constant price of fish. Suppose that, because of an increase in world demand, the price of the fish from this fishery rises significantly. • Illustrate and explain the impact of this price-increase on the fish stock and the competitive level of effort (or employment) in the fishery. What can be said about the long-run impact on the fish catch? Is it positive, negative, or indeterminate? Explain.
Suppose a firm is currently maximizing profit by producing 100 units of output per day. It is then discovered that the firm owes $1,000 for a one-time tax violation that occurred a few years ago. The firm now needs to pay the $1,000 to the government no matter what. How should the firm react to this additional cost? The firm should increase output in order to increase revenue enough to cover the additional cost. The firm should continue to produce 100 units of output per day, as the $1,000 is a sunk cost and therefore has no effect on production decisions. The firm should shut down in the short run and start back up in the long run. The firm should decrease output in order to decrease variable costs by $1,000.
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A manufacturer of mountain bikes has the following marginal cost function: C′(q)=700/0.5q+2 where qq is the quantity of bicycles produced. When calculating the marginal revenue and marginal profit in this problem, use the approach given for the marginal cost and marginal revenue in the discussions in your textbook. a) If the fixed cost in producing the bicycles is $3200, find the total cost to produce 35 bicycles.Answer: $ b) If the bikes are sold for $250 each, what is the profit (or loss) on the first 35 bikes?Answer: $ c) What is the marginal profit on bike number 36?Answer: $