revenue by $1012.50 ($6.75*150)‚ whereas the increase to costs will only be $600 ($4.00*150). To maximize profits‚ a perfectly competitive firm with excess capacity produces the output at which price equals marginal cost. In this case‚ the price of $6.75 is still greater than their marginal cost at $4.00. The dry cleaning service would be better off taking
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Raggs‚ Ltd.‚ a clothing firm‚ determines that the marginal profit and marginal cost are given by ‚ . Find the total revenue if R(0) = 3000. 1‚ The distance profit is given by the definiteinte gral of (P’(x)) Px=P’x=150-0.5xdx =150x-0.25x2+CThe distance cost is given by the definiteinte gral of (C’(x)) Cx=C’x=4000+0.25x2dx =4000x-112x3+CWe have the total revenue is R(x) = P(x) + C(x) Cx=150x-0.25x2+C+4000x+112x3+C =112x3-0
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Question 1 (a) Price (P‚$’000) Quantity (minutes) Total Revenue (TR‚$’000) Marginal Revenue (MR‚$’000) Total Cost (TC‚$’000) Marginal Cost (MC‚$’000) Average Cost (ATC‚$’000 per minutes) 90 100 9000 --- 5000 --- 50 80 120 9600 30 5500 25 45.83 70 140 9800 10 5700 10 40.71 60 160 9600 -10 6000 15 37.5 50 180 9000 -30 6400 20 35.56 (b) The market structure of television broadcasting industry is oligopoly. As the television broadcasting industry requires
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in downtown San Diego. It estimates that the short run marginal cost (MC) of a single hotel room is about $40 per day (cleaning‚ cooling‚ etc.). To determine the optimal price of a hotel room‚ the firm should a. choose a price that matches demand to capacity. b. use the straight-forward MC = MR rule. c. consider the lost profit from building only 300 rooms instead of 400. d. adjust short run marginal cost the long run marginal cost. 1. Consider the following payoff table. In this
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output change if the fixed cost increased from $40 to $60? More generally‚ explain how the level of fixed cost affects the choice of output. The table is as follows: Output (Units) Total Revenue ($/unit) Total Cost ($/unit) Profit ($) Marginal Revenue ($/unit) Marginal Cost ($/unit) 0 0 30 -30 50 1 50 80 -30 50 50 2 100 100 0 50 20 3 150 130 20 50 30 4 200 172 28 50 42 5 250 226 24 50 54 6 300 296 4 50 70 When the firm is producing a positive amount of output‚ profit is maximized when Q = 4‚ regardless
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where marginal cost (MR) is equal to marginal revenue (MR) which is where the two graphs intersect. This is the ideal situation to a profit seeking company. Since price is greater than the Average Total Cost (ATC)‚ for each unit sold the profit per unit is simply the value by which the price exceeds the ATC. To maximize profit the firm should continue production in the short run at the quantity where MR=MC. A profit maximizing output means every unit of output represents greater marginal revenue
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table: Labor Input I (No. of Workers) Total Product Marginal Product Average Product 1 3 0 + 3 = +3 3/1 = 3 2 6 6 – 3 = +3 6/2 = 3 3 16 16 – 6 = +10 16/3 = 5.33 4 29 29 – 16 = +13 29/4 = 7.25 5 43 43 – 29 = +14 43/5 = 8.6 6 55 55 – 43 = +12 55/6 = 9.17 7 58 58 – 55 = +3 58/7 = 8.29 8 60 60 – 58 = +2 60/8 = 7.5 9 59 59 – 60 = -1 59/9 = 6.56 10 56 56 – 59 = -3 56/10 = 5.6 b. Plot the (i) total product‚ (ii) marginal product‚ and (iii) average product functions. c. Determine
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identical in reasoning. The higher the price (i.e. the cost of bearing and rearing the child) the lower the quantity demanded (i.e. the number of children birthed/desired). The cost can be perceived or actual. The other assumption is there is diminishing marginal returns setting in i.e. as the costs of bearing and rearing multiply by the number of children‚ or as the
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defined and shown the relationship between them to see how things work in business. Define Marginal Revenue: “Marginal Revenue is the change in total revenue that results from selling one more unit of output.” (McConnel‚ 2012) What this means is marginal revenue occurs when total revenue changes‚ whether it be higher or lower in production. Any change that occurs in total revenue is when marginal revenue takes place. Explain its relationship with Total Revenue: First‚ total revenue needs
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24 cents is a license for Windows Server‚ and the true marginal cost to Microsoft is probably much less than 10 cents as well.” The mid-range server purchase has a portion of the this 24 cent charge that is directed towards the Microsoft licensing fee. Since Microsoft owns this‚ they then keep the profit to take the place of the money lost by users not having their own on-site Exchange server. 3. How does the example Office 365 marginal revenue analysis change if the cost of running that server
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