Quiz-PSet-VII

# Quiz-PSet-VII - 3(i What is the outlet’s optimum daily...

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ARE 100A Quiz on Problem Set VII March 5 2010 Richard Howitt Name…………………………….. Section…………………………….. Assume that the average selling price for a coffee (Latte) from a Starbucks outlet sold for \$5.56 in 2007. If the daily quantity Q is measured in 100 cup units (ie for 100 cups Q = 1), and the individual Starbucks outlet has a short run cost function of: C = 6Q - Q 2 + 0.107 Q
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Unformatted text preview: 3 (i) What is the outlet’s optimum daily quantity to produce in 2007 ? ( ii ) If the monthly fixed cost is \$20,000 ( assume 30 days in a month) what is the monthly net return per outlet to Starbucks when coffee sells for \$5.56/cup. (iii) If due to competition and the economy, the selling price of a cup of coffee drops to \$3.25 in 2010, what is the outlet’s optimum daily quantity to produce in 2010 ?...
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