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: Cengage Learning
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Textbook Question
Chapter 11, Problem 2E
Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one large firm—Tile King. Ajax produces a multiheaded tunnel wall scrubber that is similar to a model produced by Tile King. Ajax decides to charge the same
- Compute the marginal cost curve for Ajax.
- Given Ajax’s pricing strategy, what is the marginal venue function for Ajax?
- Compute the profit-maximizing level of output for Ajax.
- Compute Ajax’s total dollar profits.
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AMCO is a firm producing tables in Spain. It has a fixed cost of
100$ and a cost per unit of production of 2$.
The demand function for a table is given by: P = 60 - 4Q
1. Find the equations of TR and TC.
2. Write down the equation of the profit.
3. Find Qwhen TR = 0 (x-intercept/roots).
4. Find Qwhen TR is a maximum.
5. Deduce the maximum total revenue (TR max).
PakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q2 and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$.
Write the equations of the firm’s costs, as a function of Q:
Average Total Cost ATC
Average Variable Cost AVC
Average Fixed Cost AFC
Given above costs can you determine what will be the firm’s production in Stage 1?
What is the breakeven price and breakeven quantity for this firm?
What is the shutdown price and quantity for this firm?
Draw the firm’s costs in a graph as per your determination in (a). Label the breakeven and shutdown price and quantity using information in (b) and (c) above.
Given the market price of Pak$ 50
how many units should the firm produce?
how many firms are competing in this market in short-run?
How many firms will be in the industry in the long-run?
How do you interpret the profit or loss condition of PakPerfect? Use a two-panel graph of the Market and…
PakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q2 and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$.
a- Write the equations of the firm’s costs, as a function of Q:
Average Total Cost ATC
Average Variable Cost AVC
Average Fixed Cost AFC
b- Given above costs can you determine what will be the firm’s production in Stage 1?
c- What is the breakeven price and breakeven quantity for this firm?
Chapter 11 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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