What is the optimal number of units that should be produced

Assignment Help Microeconomics

Reference no: EM131789961

Question: A company produces and sells a consumer product, and is able to control the demand for the product by varying the selling price. The approximate price, p, and demand, D, is approximately

p = 38 + 2, 700/D for D ≥ 1

where p is the price per unit in dollars and D is the discrete demand per month. The company is seeking to maximize its net profit. The fixed cost is S1000 per month and variable cost is proportional to $D.

a. What is the optimal number of units that should be produced and sold each month?

b. Show that your answer in part (a) maximizes profits.

c. What is the unit price of your answer in part (a)?

Reference no: EM131789961

Questions Cloud

Calculate the standard deviation of their current ages : Without doing any calculation, indicate whether the mean of the children's age in the next 15 years will be larger, smaller, or the same as the mean.

Draw a cash flow diagram of both alternatives : A company is considering investing $10,000 in a heat exchanger. The heat exchanger will last 5 years, at which time it will be sold for $2,000.

Compare the standard deviation in usd and in cents : Compare the standard deviation in USD and in cents; do not forget the units. Explain what multiplying each number in a data set by 100 does to the SD.

Prepare the journal entries to record these transactions : Prepare the journal entries to record these transactions in the Street Improvement Fund and governmental activities journals

What is the optimal number of units that should be produced : A company produces and sells a consumer product, and is able to control the demand for the product by varying the selling price.

Tight cultures are best defined as cultures in which : Which of the following statements about organizational culture is true? Tight cultures are best defined as cultures in which.

Which group of students do you think would have a hsd : Suppose you have a data set with IQ levels of some students who perform well in quizzes and some students who are excellent athletes.

Marketing mix-that combination of product-price-promotion : Marketing mix(es) - that combination of product, price, promotion, and place developed to appeal to a specific target market.

Does either data set show strong skew : The brain size (in hundreds of thousands of pixels) is reported for some men and women in the table. (Source: Willerman, L., Schultz).

User Account

All Pages