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olga55 [171]
3 years ago
14

A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has a price of $10, average tota

l cost of $8, and fixed cost of $200. Given this, profit is _______, marginal cost is _______, and average variable cost is_________.
Business
1 answer:
Alex73 [517]3 years ago
3 0

Answer:

$200; $10; $6

Explanation:

(i) Profit is the difference between total revenue and total cost.

Profit = Total revenue - Total cost

         = (Average revenue - Average cost) Q

         = ($10 - $8) × 100 units

         = $200

(ii) Under a perfectly competitive market conditions, the average revenue and marginal revenue are equal and profit maximizing firms under these market conditions producing at a point where marginal revenue is equal to the marginal cost.

Therefore, the marginal cost is equal to $10.

(iii) The average cost is the sum total of average fixed cost and average variable cost.

AC = AFC + AVC

AVC = AC - AFC

        = $8 - ($200 ÷ 100 units)

        = $8 - $2

        = $6

Therefore, average variable cost is equal to $6.

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8 0
1 year ago
A cosmetics company is planning the introduction and promotion of a new lipstick line. The marketing research department has fou
Mademuasel [1]

Answer:

p = 59.11 dollars

Explanation:

Given

Price:     p(x) = 8eˣ      (0 ≤ x ≤ 2)

Revenue;  R = x*p = 8xeˣ

p = ?  when R be at maximum

We can apply

dR/dx = d(x*p)/dx = 0

⇒  d(8xeˣ)/dx = 8*(1*eˣ + x*eˣ) = 0

⇒  eˣ*(1 + x) = 0    ⇒    x = - 1

as x = - 1 ∉ [0, 2]

then, we have

p(0) = 8e⁰ = 8

R = 0*8 = 0

If x = 1

p(1) = 8e¹ ≈ 21.74

R = 1*21.74 = 21.74

If x = 2

p(2) = 8e² ≈ 59.11

R = 2*59.11 = 118.22

Implies that, R(x) is maximum at x = 2.

   

Thus, the price that maximize the revenue of the company is 59.11 dollars.

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