Assignment 1 Solution

# When the setup cost is higher than 150000 the profit

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Unformatted text preview: than \$150,000, the profit would be negative. Assignment #1 9/28/2010 3 of 7 MGSC 1205 Introduction to Quantitative Methods I Fall 2010 (d) If the company anticipates that they could sell 300 units, how large can the production cost per unit be before the grandfather clocks cease to be profitable? To breakeven when x = 300, c = ? , where Therefore, the highest variable cost per unit is \$733.33. When the cost per unit goes higher than \$733.33, the profit would be negative. (e) If the company anticipates that they could sell 300 units, how small can the selling price per unit be before the grandfather clocks cease to be profitable? To breakeven when x = 300, F = ? , where Therefore, the lowest selling price is \$566.67 . For any price lower than this value, the profit would be negative. (f) When you answer the questions (c) through (e), which variable is the decision variable? Which are model parameters? Question Decision Variable Model Parameters (c ) F x, c, p (d) c x, F, p (e) p x, F, c #3. The Power Notebooks, Inc. produces and sells a new type of LED monitors. The company estimates the demand and supply functions for the product are linear functions as given below, where p is the price per unit and q is the quantity sold or supplied. D: S: (a) Determine the equilibrium quantity and price . Substitute p = \$600 into D or S: Therefore, the market equilibrium price is \$ 600 per unit, and 5,000 units could be sold at this price. Assignment #1 9/28/2010 4 of 7 MGSC 1205 Introduction to Quantitative Methods I Fall 2010 (b) If customers are charged a 15% sales tax on the product, find the new demand function, which relates the before-tax unit price to the quantity sold. The new demand function D’: (c) Determine the new market equilibrium quantity and price resulting from the shift in demand found in (b). What is the tax amount charged on each unit, and what is total amount a customer has to pay for a unit? Substitute p = \$562.5 into D’ or S: Therefore, the market equilibrium price is \$ 56...
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## This note was uploaded on 01/16/2014 for the course MGSC 1205 taught by Professor Sarhan during the Fall '13 term at Dalhousie.

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