1.Which of the following is NOT a way to express the formula for profit? 2. Dan
ID: 1191279 • Letter: 1
Question
1.Which of the following is NOT a way to express the formula for profit?
2. Dan is the owner of a price-taking company that manufactures sporting goods. One particular facility Dan owns produces baseball bats and baseball gloves. His cost function for baseball bats is CB(QB,QG) = 100QB + QB2 + QBQG and the marginal cost is MCB = 100 + 2QB + QG, where QB is the output level for bats and QG is the output level for gloves. Dan's cost function for baseball gloves is CG(QB,QG) = 50QG + QG2 + QGQB, and the marginal cost is MCG = 50 + 2QG + QB. The price of a baseball bat is $240 and the price of a baseball glove is $150. If Dan were to shut down his production of bats and only produce gloves, what would be his profit-maximizing sales quantity of gloves?
3.A price-taking firm's variable cost function is C = Q3, where Q is the output per week. It has a sunk fixed cost of $2,000 per week. Its marginal cost is MC = 3Q2. What is the profit-maximizing output if the price is P = $192?
a.0
b.6
c.8
d.10
4.Dan is the owner of a price-taking company that manufactures sporting goods. One particular facility Dan owns produces baseball bats and baseball gloves. His cost function for baseball bats is CB(QB,QG) = 100QB + QB2 + QBQG and the marginal cost is MCB = 100 + 2QB + QG, where QB is the output level for bats and QG is the output level for gloves. Dan's cost function for baseball gloves is CG(QB,QG) = 50QG + QG2 + QGQB, and the marginal cost is MCG = 50 + 2QG + QB. The price of a baseball bat is $240 and the price of a baseball glove is $150. If he only produced gloves, what would Dan's profit be if he produces the profit-maximizing quantity?
a.$2,000
b.$2,200
c.$2,500
d.$3,100
5.How would a $10 increase in an avoidable per-unit fixed cost effect a price-taking firm's supply curve?
a.MC would increase by $10, and AC would not change.
b.AC would increase by $10, and MC would not change.
c.MC and AC would both decrease by $10.
d.MC and AC would both increase by $10.
Explanation / Answer
1) suppose P(Q)= price per unit
R(Q)= total revenue
C(Q)= total cost
Profit= R(Q)- C(Q)
= Revenue-cost
= [P(Q)*Q]- C(Q)
Hence, the answer is c.
3) Total cost= fixed cost +variable cost
= Q^3+ 2
Average total cost= Total cost= (Q^3+2)/Q
= Q^2+2/Q
Marginal cost= 3Q^2
At profit maximizing output, P=MC
3Q^2= 192
Hence, Q^2= 64
Q=8
2) and 4): Am not able to understand the cost unction clearly. Please clarify the mathematical sign like (^, *,+,-) clearly.
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