HW chap 9

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Unformatted text preview: e z to.mhe c loud.mc gr a w- hill.c om/hm.tpx? todo= pr intvie w 1/14 1/15/14 Assignme nt Pr int Vie w The publisher's profit­maximizing sales quantity will be the quantity at which the difference in revenue and cost is greatest, where marginal revenue equals marginal cost (MC): 0.85MR = MC MR = MC/0.85. Thus, the author will want to set a lower price than the publisher to sell the higher quantity. Intuitively, the author will find selling additional books to be a more attractive proposition than the publisher (and so will want to set a lower price), because the publisher will bear any additional cost of producing extra books. 7. awar d: 4 out of 4.00 points A price­taking firm's variable cost function is where Q is its output per week. It has a sunk fixed cost of $1,000 per week. Its marginal cost is Instructions: Enter your answers as whole numbers. a. What is its profit­maximizing output when the price is P = $729? 9 units b. What is the profit maximizing output if the fixed cost is avoidable? 9 units rev is ed jrl 08­11­2011 Worksheet Section: Marginal Revenue, Marginal Cost, and Profit Mazimization A price­taking firm's variable cost function is where Q is its output per week. It has a sunk fixed cost of $1,000 per week. Its marginal cost is Instructions: Enter your answers as whole numbers. a. What is its profit­maximizing output when the price is P = $729? 9 units b. What is the profit maximizing output if the fixed cost is avoidable? e z to.mhe c loud.mc gr a w- hill.c om/hm.tpx? todo= pr intvie w 2/14 1/15/14 Assignme nt Pr int Vie w 9 units rev is ed jrl 08­11­2011 Explanation: A firm is a price taker when it can sell as much as it wants at some given price P, but nothing at any higher price. To find the profit­maximizing sales quantity using marginal...
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This note was uploaded on 01/22/2014 for the course ECO 3352 taught by Professor Ax during the Fall '13 term at Troy.

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