A firm is planning to manufacture a new product. As the selling price is increased, the quantity that can be sold decreases. Numerically the sales department estimates: P $350-0.2Q where P-selling price per unit; Q-quantity sold per year. On the other hand, management estimates that the average unit cost of manufacturing and selling the product will decrease as the quantity sold increases. They estimate C S40Q+ $20,000 where C= cost to produce and sell0 per year. a) Write the total revenue relation. b) The firm's management wishes to maximize profit. What quantity should the decision makers plan to produce and sell each year and what profit c) At what annual quantity of production will the company breakeven

A firm is planning to manufacture a new product. As the selling price is increased, the quantity that can be sold decreases. Numerically the sales department estimates: P $350-0.2Q where P-selling price per unit; Q-quantity sold per year. On the other hand, management estimates that the average unit cost of manufacturing and selling the product will decrease as the quantity sold increases. They estimate C S40Q+ $20,000 where C= cost to produce and sell0 per year. a) Write the total revenue relation. b) The firm's management wishes to maximize profit. What quantity should the decision makers plan to produce and sell each year and what profit c) At what annual quantity of production will the company breakeven

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 9E

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