Explain why a decision-maker employs calculus in business

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Question: A graduate from Central University has established an economic and financial consulting firm. He has recently begun to give economic advice to his clients. Acting as one of the firm's consultants, you have estimated the demand curve of a client's firm to be TR = 32Q - Q2 where TR is the total revenue in thousands of Ghana cedis, and Q is the output in units. Your investigation of the clients' cost profile shows that marginal cost is given by TC = Q2 -20Q + 200 Where TC is the total cost in thousands of Ghana cedis, and Q is output in units. Required: (a) Explain why a decision-maker employs calculus in business decision-making. (b) Derive the average revenue and marginal cost functions. (c) Calculate the output level that maximizes profit. (d) What is the maximum profit? (e) Calculate the price that maximizes profit. (f) Compute the price elasticity of demand for the firm's product at the profit-maximizing output level. (g) As a consultant, advise the firm on its pricing policy. (h) The government imposes a unit tax of GH¢10 on the firm, calculate: i. the new profit maximizing level of output. ii. the new maximum profit.

Reference no: EM133633189

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