Determining maximum amount of profit

Assignment Help Microeconomics
Reference no: EM1367159

The Ali Baba Co., is the only supplier of a particular type of Oriental carpet. The estimated demand for its carpets is

Q= 112,000 - 500P + 5M

Where Q = number of carpets, P = price of carpets (dollars per unit), and M = consumers' income per capita. The estimate average variable cost function for Ali Baba's carpets is

AVC = 200 - 0.012Q + 0.000002Q2

Consumers' income per capita is expected to be $20,000 and total fixed cost is $100,000.

a. How many carpets should the firm produce in order to maximize profit?

b. What is the profit-maximizing price of carpets?

c. What is the maximum amount of profit that the firm can earn selling carpets?

d. Answer parts a through c if consumers' income per capita is expected to be $30,000 instead.

Reference no: EM1367159

Questions Cloud

Attributes of dysfunctional family communication patterns : Explain some attributes of dysfunctional family communication patterns and recognize some specific strategies you can use for positively influencing or changing family communication patterns.
Statements to find array elements are null or not : Write down statements needed to find whether any of the array elements are null or refer to the empty String. Set the variable hasEmpty to true.
What is the average acceleration of bullet through board : A 64 Ω resistor is connected in parallel with a 115 Ω resistor. This parallel group is connected in series with a 20 Ω resistor. The total combination is connected across a 15V battery.(a) Find the current in the 115 Ω resistor.(b) Find the power ..
Limit exports to the united state : In 1981, the United State negotiated a contract with the Japanese. The contract called for Japanese auto firms to limit exports to the United State.
Determining maximum amount of profit : What is the profit-maximizing price of carpets? What is the maximum amount of profit that the firm can earn selling carpets?
Find out the radius r of the tire : A stone has a mass of 4.00 x10-3 kg and is wedged into the tread of an automobile tire, as the drawing shows. The coefficient of static friction between the stone and each side of the tread channel is 0.76.
Positive or negative impact on health care delivery : There is considerable discussion of whether or not legal and legislative processes have had a positive or negative impact on health care delivery at local, state, and national levels. What do you think?
Write down sql needed to create employee table : Write down SQL needed to create employee table containing the following data: employeeID, text, length of 5, primary key lastName, text, length of 25
Marshallian demand function : A firm has a cost function given by the following: Find the firm's production function, y= f(x1, x2).

Reviews

Write a Review

 

Microeconomics Questions & Answers

  Managerial economics-demand-supply and equilibrium

Assume that the demand and supply functions for good X are as follows: What is the equilibrium price and equilibrium quantity?

  Simple keynesian model

Using an aggregate supply diagram and aggregate demand or model of the economy, graphically explain and discuss the short-run and long-run effects.

  Economic analysis of events

Levi Strauss successfully markets Levi jeans on the History channel as a way for older men to stay young forever. What will happen in the jeans market ceteris paribus?

  Demand-quantity demanded-supply

Explain what happens to price and quantity of milk when the following events take place: For each and every event, specify how it effects either demand, quantity demanded, supply, or quantity demanded. It is also important to demonstrate how the ch..

  Determining effect of subsidy

What effect will each of the following have on the supply of automobile tires?

  Analyzing demand function

Management at the Johnston Corporation estimates a demand function for its lawnmower line to be:Explain the coefficients of each explanatory variable.

  Demand-supply explanations of recent price change

Name any good or service which has a noticeable recent price change. Using concepts of supply and/or demand, what are some possible explanations for this change in price?

  Stockpiled lobster-price elasticity

Describe the effect of increase from 1998-1999. How would the increase in demand affect the price? How would the price effect depend upon the price elasticity of supply? Please describe how. (Explain the illustration instead of actually drawing it)

  Economic profit in the short run bot

Why does rent control result in a shortage of rental units.

  Determine demand and revenue equation

Results for Linear Demand Curve Estimation. Kenny Mcormick manages a 100-unit apartment building and knows from experience that all units willbe occupied if rent is $900 per month.

  European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

  Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd