e
cted Marginal Revenue will be:
)Q
, or 200 – (4/5)Q = 120.
Q will equal (5/4)(200 – 120) or 100.
The cost of producing 100 units will be 3000 + 120(100), which equals 15,
evenue will equal 100(100) or 10,000.
Profit will be 10,000 – 15,000 = -5,000.
Total revenue will equal 175(100) or 17,500.
Profit will be 17,500 – 15,000 = 2,500.
0 + 2,000 = 1,000.
The variance of future profits will equal (1/5)(-5,000 - 1,000)2 + (4/5)(2,500 – 1,000)2 = 9,000,000.
The standard deviat
G
1
1
2
2
1
1
1
2
(150, 210)
(160, 200)
2
(200, 220)
(230, 170)
2
(200, 240)
(150, 220)
2
(150, 150)
(180, 100)
E
H
G
C
F
H
G
D
E
H
A
G
F
H
G
E
H
B
G
C
F
H
G
D
E
H
G
F
H
al Bid = 50,000 – (50,000 – 20,000)/5 = 44,000.
ed Gain = {(44,000-20,000)/(60,000 – 20,000)}4(50,000 – 44,000) = 777.60
Optimal Bid = 800 – (800 – 200)/20 = 770
gh = 60 + 60/i = 185 + 50/i = PVLow for i = 10/125 = 0.08 or 8 percent.
nal revenue MR(Q) = 800 – 20Q.
Here output Q = QA + QB.
To maximize profits:
A = MC(QA)
or
2QA + QB =40
B = MC(QB)
or
QA + (3/2)QB = 40
= QA + QB = 10 + 20 = 30.
The profit maximizing price P(30) = 800 – 10(30) = 500.
Profits earned by the firm will be:
4,000 + 10 È 102) – (2,000 + 5
202)
[1 + 1/-3.0]PStudent = [1 + 1/-2.0]($12) = MRNon-Student
PStudent = $9.00
500
1,500
$10.00
$15.00
Supply
Demand
Quantity
Price
EQ,P = (dQ/dP)(P/Q) = (-100)(5/1,000) = -0.50
CS = ½ (10)(1,000) = 5,000
000) = 2,500
PSPost Tax = ½ (4)(800) = 1,600
ê PS = 1,600 – 2,500 = - 900
Deadweight Loss = ½ (3)(200) = 300
d 20 units of labor.
Cost = 150(20) + 200(30) = 9,000.
Per unit cost equals 9,000/600 = 15.00
y labor.
To produce 600 units of output you employ L = 200.
Cost = 150(200) = 30,000.
Per unit cost = 30,000/600 = 50.00
units of output, 600 = 15K1/3L2/3 = 15L1/3L2/3 = 15L.
Thus L = K = 40.
Total Cost = 200(40) + 100(40) = 12,000
Per unit cost = 12,0
Wc = 1,900,000 + [38.15/40](100,000)
=
1,995,375
= 1,999,500 – 1995,375
π
= 4,125
pL = 0.0005(1,000,000)
= 500
pL +
= 500 + 4,125 = 4,625
π
» %
A
10 = 1.25
%º A
%§ A = 10/1.25 = 8.00
%
QBeer = -0.75 ' 15 = -11.25
or’s VMP = P
MP.
C) for Acme.
ntercept as ALC, but is twice as steep.
Your first step here is to draw the MLC curve on this graph.
Or, if you prefer algebra:
VMP = 200 – ½ L;
W = 20 + ½ L
MLC = 20 + L
Maximize profits where we have VMP = MLC
200 – ½ L = 20 + L
L = (2/3)(180 = 120
W = 20 + ½ (120) = 80
Wage
200
Supply
150
100
50
Demand
Labor
0
400
300
200
100
r L = 120.
Acme will offer a wage = 80.
Hence 140 = 5.00
MP.
MP = 140/5 = 28.
LC curve.
Subtract fixed costs from this figure to determine economic profit:
Profit = ½ (180)(120) – 9,600 = 1,200.
0 - 2Q = 0 for Q = 250 and P = 500 – 250 = 250
,000 = - 2,500
= 100 = MC for Q = 150 and P = 250 – ½ (150) = 175
1
,250
Q) = 1000 - 2Q = 400 = MC for Q = 300
80,000 = 10,000
Your firm faces random future demand, but you must commit to a
production decision today, before you know what demand will be.
Your firm’s cost function is C(Q) = 3,000 + 120Q.
Demand will be LOW: