MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Chapter 14.1, Problem 2Q
To determine
Explain the profit maximizing condition.
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(b) You are the CEO for a lightweight compasses manufacturer. The demand function for the lightweight compasses is given by p = 40−4q2where q is the number of lightweight compasses produced in millions. It costs the company $15 to make a lightweight compass.
(i) Write an equation giving profit as a function of the number of lightweight compasses produced.
(ii) At the moment the company produces 2 million lightweight compasses and makes a profit of $18,000,000, but you would like to reduce production. What smaller number of lightweight compasses could the company produce to yield the same profit?
Giocattolo is a profit-maximizing firm producing toy cars, which it can produce and sell in its home country, Italy, and abroad in Spain. The average cost
(AC) curve on the following graph represents Giocattolo's cost of producing toy cars within one factory, whether in Italy or in Spain.
COST (Dollars per toy car)
20
18
16
14
12
10
8
4
2
0
0
10 20 30 40 50 60 70
80
QUANTITY (Thousands of toy cars)
AC
90 100
Suppose that at the current market price of toy cars, the demand for Giocattolo's product is 10,000 toy cars per year in Italy and 20,000 toy cars per
year in Spain. (Hint: Select each point on the previous graph to see its coordinates.)
Based on Giocattolo's average cost curve, within one factory it can produce 20,000 toy cars at $
per toy car, and produce the total of 30,000 toy cars at $
per toy car.
per car, produce 10,000 toy cars at
1. The Abner Corporation, a retail seller of television sets, wants to determine how many
television sets it must sell in order to earn a profit of $10,000 per month. The price of each
television set is $300, the average variable cost is $100, and the fixed costs are $5,000 per month.
a. What is the required sales volume for Abner Corporation to earn a profit of $10,000 per
month?
b. If the corporation were to sell each television set at $350 rather than $300, what would
be the required sales volume?
c. If the price is $350 but the average variable cost decreased to $85 rather than $100, what
would be the required sales volume now?
Chapter 14 Solutions
MICROECONOMICS
Ch. 14.1 - Prob. 1QCh. 14.1 - Prob. 2QCh. 14.1 - Prob. 3QCh. 14.1 - Prob. 4QCh. 14.1 - Prob. 5QCh. 14.1 - Prob. 6QCh. 14.1 - Prob. 7QCh. 14.1 - Prob. 8QCh. 14.1 - Prob. 9QCh. 14.1 - Prob. 10Q
Ch. 14.A - Prob. 1QECh. 14.A - Prob. 2QECh. 14.A - Prob. 3QECh. 14.A - Prob. 4QECh. 14 - Prob. 1QECh. 14 - Prob. 2QECh. 14 - Prob. 3QECh. 14 - Prob. 4QECh. 14 - Prob. 5QECh. 14 - Prob. 6QECh. 14 - Prob. 7QECh. 14 - Prob. 8QECh. 14 - Prob. 9QECh. 14 - Prob. 10QECh. 14 - Prob. 11QECh. 14 - Prob. 12QECh. 14 - Prob. 13QECh. 14 - Prob. 14QECh. 14 - Prob. 15QECh. 14 - Prob. 16QECh. 14 - Prob. 17QECh. 14 - Prob. 18QECh. 14 - Prob. 19QECh. 14 - Prob. 20QECh. 14 - Prob. 21QECh. 14 - Prob. 22QECh. 14 - Prob. 23QECh. 14 - Prob. 24QECh. 14 - Prob. 25QECh. 14 - Prob. 1QAPCh. 14 - Prob. 2QAPCh. 14 - Prob. 3QAPCh. 14 - Prob. 4QAPCh. 14 - Prob. 5QAPCh. 14 - Prob. 6QAPCh. 14 - Prob. 7QAPCh. 14 - Prob. 1IPCh. 14 - Prob. 2IPCh. 14 - Prob. 3IPCh. 14 - Prob. 4IPCh. 14 - Prob. 5IPCh. 14 - Prob. 6IPCh. 14 - Prob. 7IPCh. 14 - Prob. 8IPCh. 14 - Prob. 9IP
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