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Which of the following will maximize profit? |
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- FITnest is one of the few fitness centers serving the greater area. The gym has been open for 3 years. It charges a flat price of $25 per visit to its clients, and the firm’s current average cost of production is $10 per visit. (You may assume that average cost has the “traditional U-shape”.) a) The owners of the gym heard you are studying economics, and they want some advice on how they could possibly increase their profits through price discrimination, which is a concept they have heard of but do not know much about. Provide an explanation of what price discrimination is and give them an example of how they could use group pricing in their climbing gym business. Explain how group pricing works to increase their profit. b) Given the current situation in the market for fitness in the area, would you expect to see competitors enter or exit the market? Explain. c) Given the current market conditions, what would you predict to observe in the long run with respect to the demand for…1. The Abner Corporation, a retail seller of television sets, wants to determine how many television sets it must sell in order to earn a profit of $10,000 per month. The price of each television set is $300, the average variable cost is $100, and the fixed costs are $5,000 per month. a. What is the required sales volume for Abner Corporation to earn a profit of $10,000 per month? b. If the corporation were to sell each television set at $350 rather than $300, what would be the required sales volume? c. If the price is $350 but the average variable cost decreased to $85 rather than $100, what would be the required sales volume now?Question 7 A firm, focusing on producing toothpaste has a demand function 2? = 10 − 0.25?. If fixed cost per unit is -(+ and variable cost per unit function is 2? − 20 + -)), where Q is number of toothpastes produced and P is the price per toothpaste: a) Determine the number of toothpastes that maximizes the company’s profit. b) How much should the firm charge for one toothpaste? c) Find the total profit at the profit maximizing level of output. d) Using the own price elasticity of demand, comment on the firm's pricing policy options.
- 14. A shop which sells T- shirts has a demand function and a total cost function given by the equations: P = 240 – 10Q and TC = 120 + 8 Q. a) Write down the equations for TR and Profit. b) Write down equation for MR and MC. c) Calculate the number of T- shirts which must be sold to maximize profit and Revenue.4. A vertically integrated automobile company has an upstream engine division and a downstream assembly division. The demand for the company's cars is given by Q = 20-P. Each car requires one engine. The downstream division's total cost of assembling cars is TCD(Q) = 4Q. The upstream division's total cost of producing engines is TCv (Q) = Q². (a) Suppose that there is no outside market for engines. What is the price and quantity of cars produced by the company? (b) Suppose that there is no outside market for engines. What should be the transfer price for engines? [Hint: the transfer price of an engine should equal the marginal cost of engine production at the optimal quantity.] (c) Suppose that there is a competitive outside market in which the price of an engine is 12. What is the price and quantity of cars produced by the company? (d) Suppose that there is a competitive outside market in which the price of an engine is 12. What is the quantity of engines that the company buys or…The graph to the right depicts the daily total cost and total revenue curves for a firm. If the firm chooses the profit maximizing level of output, it will earn a profit of $ per day. (Round your answer to the nearest penny.) Revenue and Costs (3) 1,180 1910 624 480 48 91 118 Output (per day) TR a a G
- 22) Ace Shoe Company sells heel replacement kits for men's shoes. It has fixed costs of $6 million and unit variable costs of $5 per pair. Suppose a consultant tells Ace it can sell 700,000 heel repair kits, what price must it charge to achieve a profit of $2.5 million? (Please show your calculation steps3. The equation of the monthly demand for cabin bags is given by: 45-p= 0'5q and the monthly average cost function is: Cme(q) = q²-39'50q+120+¹25, where p ≤ 45 is the unit price and q are the number of units sold. 3.1 What are the price and quantity that maximize the total profit? How much is this profit? 3.2 Calculate the marginal income (revenue) of the 20th unit using marginal income (revenue) and compare it to the actual additional income. 3.3 Calculate the price elasticity of demand for the quantity that maximizes profit and interpret the result obtained.5. The daily demand for rooms at a motel is given by P=100-2Q. Assume that the motel has 40 rooms. 5a. If total variable costs of running this motel are zero, find the price that maximizes profit and find the number of rooms rented at that price. Remember that profit is total revenue (i.e., TR = PQ) less total cost (i.e., the sum of variable costs and fixed costs). 5b. If the incremental cost of renting a room is $9 (i.e., the cost of paying the maid to clean the room, the cost of providing clean towels, the cost of the little pieces of chocolate that is placed on the bed, etc. is $9), find the price that maximizes profit and the number of rooms rented at that price.
- 24) What are shut-down losses (if the firm shuts down)?3 Pierce Manufacturing determines that the daily revenue, in dollars, from the sale of x lawn chairs is R(x) = 0.003x° +0.01x +0.5x. Currently, Pierce sells 70 lawn chairs daily. a) What is the current daily revenue? b) How much would revenue increase if 75 lawn chairs were sold each day? c) What is the marginal revenue when 70 lawn chairs are sold daily? d) Use the answer from part (c) to estimate R(71), R(72), and R(73). ..... a) The current revenue is $ b) The revenue would increase by $. (Round to the nearest cent.) c) The marginal revenue is $ when 70 lawn chairs are sold daily. d) R(71) - $ R(72) $ R(73) $Given the information in the table at right, calculate the dry cleaner's marginal revenue (MR) and marginal cost (MC) at each output level. (Your answer should be rounded to the nearest cent.) Total Output (Suits Cleaned) Suit ($) ($) Price Total per Costs Revenue (S) MC ($) MR ($) 8.00 3.00 0.00 1 7.50 6.00 7.50 7.00 8.50 14.00 6.50 10.50 19.50 4. 6.00 11.50 24.00 5.50 13.50 27.50 6 5.00 16.00 30.00 4.50 19.00 31.50 4.00 24.00 32.00 OOD OO O O O D O O