A company manufactures and sells a line of machines. Demand curve is : Q=200-.25P. P=price; Q=units of production. Cost function: TC=10000+25Q+1.5Q^2. 1. What level of outputs will maximize total profits if this is a pure competitive firm? 2. What level of output will maximize total profit if this is a monopolist firm?
1. For competitive firm, profit maximizes when P=MC. Q=200-.25P so P=800-4Q. And MC=25+3Q. If we make P=MC, solved, we got Q=110.71 2. For monopolist firm, profit maximizes when MR=MC. R=P*Q=800Q-4Q^2. So MR=800-8Q; MC=25+3Q. If we set MR=MC, solved, we got Q=70.45
What is the EAR for an APR of 8% that compounded monthly?
EAR= (1+APR/n)^n-1 Here: APR=8; n=12 After we plug in these values, we get EAR=8.3%
In using "Lower of cost or market " method, what is the cost of a product with: cost= 10.5; replacement cost=10.2; selling price=14; selling cost=2; normal profit=2.5?
First: determine market value Market value is the middle value of replacement cost, market ceiling, and market floor. Replacement cost=10.2 Market ceiling= NRV=selling price-selling expense=14-2=12 Market floor= NPV-normal profit= 12-2.5=9.5 The middle value= 10.2 Second: compare market value with cost, choose the lower one Market value=10.2 and cost=10.5 ( market value is lower). Therefore, the new cost of the product is 10.2.