The following data shows total cost and demand information for Jon\'s Riding Mow
ID: 1193250 • Letter: T
Question
The following data shows total cost and demand information for Jon's Riding Mowers.
Unit Price >800 800 750 700 650 600 550 500 450 400 350
Units Demanded 0 1 2 3 4 5 6 7 8 9 10
Total Cost $ 200 $ 500 $ 700 $ 800 $ 850 $ 950 $1150 $1450 $1850 $2350 $2950
17. (5 points) What is the profit-maximizing price and sales level for riding mowers?
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18. (5 points) If total costs at each output level were to double, would the profit maximizing output level be greater or smaller than that calculated in Question 17? Can you answer this question without performing any calculations? Explain.
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#18
Explanation / Answer
ANS 17
PROFIT IS MAXIMUM AT Q= 6 AND P=550 AND PROFIT =2150
ANS 18 IF TOTAL COST DOUBLES AT EACH OUTPUT
SO AT NEW COST
PROFIT IS MAXIMUM AT Q=5, P=600 AND PROFIT =1100
SO QUANTITY SOLD WILL DECREASE VFROM 6 TO 5 DUE TO DOUBLING OF COST
PRICE QUANTITY DEMANDED TC TR PROFIT=TR-TC >800 0 200 0 -200 800 1 500 800 300 750 2 700 1500 800 700 3 800 2100 1300 650 4 850 2600 1750 600 5 950 3000 2050 550 6 1150 3300 2150 500 7 1450 3500 2050 450 8 1850 3600 1750 400 9 2350 3600 1250 350 10 2950 3500 550Related Questions
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