ECN 201 Lecture 16: ECN 201 notes april 22
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Given following Price and Total Cost functions:
P = 120 - 7Q
TC = 40 + 70Q - 10Q2 + 0.6Q3
Where P = price, and Q is output.
Fill in the table below and answer the questions below the table.
Q |
P |
FC |
TVC |
TC |
TR |
Profit |
0 |
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1 |
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2 |
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3 |
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4 |
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5 |
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6 |
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7 |
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8 |
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9 |
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10 |
If your company's goal is to maximize profit, answer the following questions below:
What price will you charge for your product?
What quantity will you produce?
And what would be your maximum profit or minimum loss at the price and output you chose?
2. If your company's goal is to maximize total revenue, answer the following questions below:
What price will you charge for your product?
What quantity will you produce?
And what would be your maximum total revenue at the price and output you chose? (3 points)
Question 3
Given a firm with the following cost data, fill in the table below.
Q = OUTPUT TFC = Total Fixed Cost AVC = Average Variable Cost ATC = Average Total Cost TVC = Total Variable Cost MC = Marginal Cost TC = Total Cost
Q |
FC |
TVC |
TC |
AVC |
ATC |
MC |
0 |
--- |
--- |
--- |
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1 |
10 |
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2 |
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3 |
10 |
10 |
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4 |
With the total revenue curve of Problem 1 and the total-cost curve of Problem 7, derive the total profit function and show how the firm determines the profit-maximizing level of output.
q | TR | TC | Profit = TR-TC | MR = Change in TR/Change in Q | MC = Change in TC/Change in Q |
0 | 0 | 1 | -1 | ||
1 | 8 | 12 | -4 | 8 | |
2 | 14 | 14 | 0 | 6 | |
3 | 18 | 15 | 3 | 4 | |
4 | 20 | 20 | 0 | 2 |
Please find MC above. Do I have the formula right?