Salvatores chapter 3 a discussion questions 9 when

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Salvatore’s chapter 3: a. Discussion Questions: 9 When sales or total revenue is at maximum, marginal revenue is zero (see figure 3-4). Since marginal cost is usually positive, marginal cost exceeds marginal revenue and the firm produces too much output. Therefore, the marketing program of the firm should be scaled down until the marginal revenue of the program equals its marginal cost. b. Problems: 1. ( a ) The total, average, and marginal revenue schedules are Q TR= 9Q-Q 2 AR MR 0 0 -- -- 1 8 8 8 2 14 7 6 3 18 6 4 4 20 5 2 5 20 4 0 6 18 3 -2 7. The average and marginal cost schedules are Q TC AC MC 0 1 -- -- 1 12 12 11 2 14 7 2 3 15 5 1 4 20 5 5 9. Q TR TC Profit

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1 8 12 -4 2 14 14 0 3 18 15 3 4 20 20 0 The profit-maximizing level of output is Q = 3. Froeb and McCann’s chapter 4: a. Individual problems: 4-2 The marginal revenue of the running shoes is less than the marginal benefit [\$55<\$60]. For the tennis shoes, the marginal revenue is greater than the marginal benefit [\$55>\$45]. Thus, the shoe company should sell the tennis shoes to the Chinese retailer, but refuse to sell the running shoes at that price. 4-4 This is an extent decision, so we have to measure the marginal benefit of adding a copier and the marginal benefit of adding a worker. The marginal productivity of a copier is 50,000 pages per day (100,000 pages/2 copiers). The marginal productivity of a worker is 10,000 pages per day (50,000 pages/5 workers). An extra copier will add five times much as an extra worker, but will cost less than five times as much. Buy a copier.
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Salvatores chapter 3 a Discussion Questions 9 When sales or...

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