The decision to expand depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients.
<h3>What is marginal cost and marginal revenue?</h3>
Marginal revenue is the change in total revenue when output is increased by one unit. Marginal cost is the change in total cost when consumption is increased by one unit.
Economic theory suggests that output should be increased if the marginal revenue exceeds the marginal cost. If marginal cost is greater than marginal revenue, the business should not be expanded. Profit is maximised when marginal revenue is equal to marginal cost.
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Using compound interest
5000 x 1.035^32 gives me 15033 which is triple the original value, therefore it’s 32 years
The option that isn't true of economic order quantity is C. The EOQ ignores inventory reorder costs and inventory carrying costs.
<h3>What is economic order quantity?</h3>
It should be noted that economic order quantity means an inventory technique that is used to make effective and efficient decisions.
In this case, the option that isn't true of economic order quantity is that the EOQ ignores inventory reorder costs and inventory carrying costs.
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Answer:
a)
P 175
Q = 250
Profit6,250
b)
P 325
Q = 875
Profit 153,125
c)
Q = 1200
P = 260
Profit = 287,000
Explanation:
It maximize profit at MR = MC
MR = 200 - 0.2Q
MC = 150
150 = 200-0.2Q
Q = 50/0.2 = Q = 250
Price:
250 = 2000 - 10P
P = 1750/10 = 175
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<u>Profit: revenue - cost</u>
$175 x 250 session - $150 per session = 6,250
<em>At new functions:</em>
150 = 500-0.4Q
Q = 350 / 0.4 = 875
Price:
875 = 2,500 - 5P
P = (2500-875)/5= 325
<u>Profit</u>
(325 - 150) * 875 = 153,125
<u>If cost changes:</u>
cost: 1000 + 20Q
marginal cost: 20
20 = 500 - 0.4Q
Q = 480 / 0.4 = 1,200
Price:
1,200 = 2500 - 5P
P = 1300/5 = 260
<u>Profit</u>
(260 - 20)Q - 1,000 = 287,000
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