Bus 640 Week 4 Assignment

TVCMCAnswer 1Answer 2Answer 3Answer 4MR is the derivative of TRThus for profit maximizing output will be arrived at when MR = MCProfit maximizing price and output for Robert Company will be where its MR (Marginal Revenue) = MCDemand function given in the problem Q = 5000 - 25Por P = (5000 - Q)/25 = 200 - Q/25Total Revenue (TR) = P * Q ie TR = (200 - Q/25) * Q = 200Q - Q^2/25ie TR'(Q) = MR = 200 -2/25QThe Marginal (MC) function is given by derivative of total cost functionThe TC (Total Cost ) function given in the problem = 1500 + 20Q + 0.02Q^2Thus 200 -2/25Q = 20 + 0.04Qie 200 - 0.08Q = 20 + 0.04Q or 0.12Q = 180Thus Robert Company must produce 1500 units of Vacuum Cleaner to obtain maximum profit.or Q = 1500 unitsUnitsMRPrice (Demand Curve)Schedule of Marginal Cost (MC), Demand Curve (Price)and Marginal Revenue (MR)Price at profit maximizing out put will be since P = 200 - Q/25 = 200 - 1500/25 = 200 - 60 = $140From the above:ie. At 1500 unitsEconomic Profit = Total Revenue less Total Cost at equilibrium level of Price and output TR = P*Q = 1500