A software producer has fixed costs of $20,000 per month and her Total Variable

Question

A software producer has fixed costs of $20,000 per month and her Total Variable Costs (TVC) as a function of output Q are given below. Complete the table (TC, MC, TR, and MR), then answer Parts A and B.

Q                      TVC                           Price
2,000              $5,000                          $25   
4,000                  7,000                            22   
6,000                18,000                            20   
8,000                33,000                            10   
10,000                50,000                              1   

Please show all work

(a.) (15 points) If software can only be produced in the quantities above, what should be the production level if the producer operates in a monopolistic competitive market where the price of software at each possible quantity is also listed above? Why? (Show all work.)

(b.) (15 points) What should be the production level if fixed costs rose to $70,000 per month? Explain.

Explanation / Answer

Total Revenue= (QxP)-FC-TVC

At Q=2000, (2000 x 25)

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.