ME Session-2.1
Optimisation
Constraints on operation of firm
Limitation of theory of firm
Nature and function of profit
Theories of profit- Risk bearing, frictional theory, monopoly theory, innovation theory,
managerial efficiency theory.
Business ethics
Quantity, Price, P
Total Revenue, TR
1000
200
200000
1400
150
210000
1800
100
180000
If price falls from $200 to $150, what is the elasticity of demand over this range?
A. -0.625
B. -1.0
C. -1.17
D. -2.5
E. -3.0
Q1=
P1=
Ep =
1000 Q2=
200 P2=
Q2Q1
1400
150
1. If Redstone wanted to minimize average total cost, it would produce how many
units?
Redstone will produce 300 units at the lowest average total cost of $90 per unit.
2. If Redstone wishes to maximize profit MARGIN, it should produce how many units.
Red