Compute calvin profit-maximizing output level

Reference no: EM1371244

Calvin's Barbershop is a popularly-priced hair cutter on the south side of Chicago. Given the large number of competitors, the fact that barbers routinely tailor services to meet customer needs, and the lack of entry barriers, it is reasonable to assume that the market is perfectly competitive and that the average $15 price equals marginal revenue, P = MR = $15. Furthermore, assume that the barbershop's monthly operating expenses are typical of the 50 barbershops in the local market and can be expressed by the following total and marginal cost functions:

TC = $7,812.50 + $2.5Q + $0.005Q2

MC =dTC/dQ = $2.5 + $0.01Q

where TC is total cost per month including capital costs, MC is marginal cost, and Q is the number of hair cuts provided. Total costs include a normal profit.

A. Compute Calvin's profit-maximizing output level.

B. Compute the Calvin's economic profits at this activity level. Is this activity level sustainable in long run?

Reference no: EM1371244

Questions Cloud

Write program which simulates checkout queue object : Write program which simulates checkout line at supermarket. Line is queue object. Customers (i.e., customer objects) arrive in random integer intervals of 1-4 minutes.

Information about marginal revenue : Consider the following demand schedule. Does it apply to the perfectly competitive firm? Calculate marginal and average revenue.

Create seven-bit adder in logicworks : Create 7-bit adder. Inputs are X[6..0], Y[6..0], and Cin. Outputs are S[6..0] = X[6..0] + Y[6..0] + Cin, where + is arithmetic addition. Implement adder in LogicWorks. The parts you can use include.

Different types of product development teams : Contrast the different types of product development teams and describe the different situations when each type would be preferable

Compute calvin profit-maximizing output level : Compute Calvin's profit-maximizing output level. Compute the Calvin's economic profits at this activity level. Is this activity level sustainable in long run?

Knowledge about business management : how taking the QRB course will prepare you for future courses in economics, finance, accounting, and research.

Local public agencies were capital constrained : Suppose you are Chief Economist of the FCC. The Chairman has called you in to discuss a thorny issue. Two wireless broadcasters operate on adjacent frequencies.

Perfect competition-cost curves : When developing short-run cost curves, it is supposed that all firms in perfect competition have the same cost curves and they all make identical short-run profits or losses.

Write algorithm to find median value using queries : As queries are expensive, you would like to calculate median using as few queries as possible. Provide the algorithm which finds median value using at most O(log n) queries.

User Account

All Pages