Question
In: Economics
The table given below reports the marginal revenue and marginal cost of the Fortune Travel Inc....
The table given below reports the marginal revenue and marginal cost of the Fortune Travel Inc. for each client. Table 12 Number of Clients Marginal Revenue Marginal Cost 1 100 $200 2 90 $100 3 80 $80 4 70 $40 5 60 $45 6 50 $50 7 40 $60 8 30 $70 9 20 $90 10 10 $120
In Table 12, assume that the total fixed cost of the Fortune Travel Inc. is zero. Compute the profit earned by the Fortune Travel Inc.with six clients. Show your work. (Show your work to earn credits. No Work, No Credit.)
Solutions
Expert Solution
The profit maximising Point of the Fortune Travel inc will be determined where its its marginal cost equsls the marginal Revenue.the marginal cost curve must cut MR curve from below.
The table below shows thr Profit Maximising output.
| Number of clients |
MR $ |
MC $ |
TC Summation of MC $ |
ATC TC/Q |
TR |
AR TR/Q ($) |
profit (TR-TC) |
|---|---|---|---|---|---|---|---|
| 1 | 100 | 200 | 200 | 200 | 100 | 100 | -100 |
| 2 | 90 | 100 | 300 | 150 | 190 | 95 | -110 |
| 3 | 80 | 80 | 380 | 127 | 270 | 90 | -110 |
| 4 | 70 | 40 | 420 | 105 | 340 | 85 | -80 |
| 5 | 60 | 45 | 465 | 93 | 400 | 80 | -65 |
| 6 | 50 | 50 | 515 | 86 | 450 | 75 | -65(Minimum loss) |
| 7 | 40 | 60 | 575 | 82 | 490 | 70 | -85 |
| 8 | 30 | 70 | 645 | 81 | 520 | 65 | -125 |
| 9 | 20 | 90 | 735 | 82 | 540 | 60 | -195 |
| 10 | 10 | 120 | 855 | 85•5 | 550 | 55 | -305 |
The above table shows the optimal number of clients =6
The minimum loss =$65 (TC-TR) at Equilibrium Point.
The below graph clarifies the situation -----
We observe the Equilibrium point E,where MC=MR anc cuts MR from below.The Optimal number of clients =6
The ATC corresponding to this point is $86 while AR =$75.
The area ABCD shows minimum loss to Fortune travel at 6. Umber o go clients. The loss is $65
Rahul Sunny answered 8 months agoRelated Solutions
The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for...
The table given below reports the marginal revenue and marginal
cost of Holmes Detective Agency for each client.
Table 9.2
Holmes’s Detective Agency
Number of Clients
Marginal Revenue
Marginal Cost
4
70
$40
5
60
$45
6
50
$50
7
40
$60
8
30
$70
9
20
$90
10
10
$120
Refer to Table 9.2. If we assume that Holmes is currently
serving 8 clients, then Holmes Agency:
A) Is maximizing profit.
B) Should find more clients to increase profits....
The revenue and cost functions for a particular product are given below. The cost and revenue...
The revenue and cost functions for a particular product are
given below. The cost and revenue are given in dollars, and
x represents the number of units .
R(x) = −0.8x2 + 704x
C(x) = 264x + 57120
(a) How many items must be sold to maximize the revenue?
________________
(b) What is the maximum revenue?
________________
(c) Find the profit function.
P(x) = ___________
(d) How many items must be sold to maximize the profit?
_______________
(e) What is...
marginal revenue equals marginal cost to maximize total revenue
marginal revenue equals marginal cost to maximize total
revenue
Explain revenue, marginal revenue, and marginal cost. Provide some examples.
Explain revenue, marginal revenue, and marginal cost. Provide
some examples.
Suppose that a monopoly faces the demand, marginal revenue, and cost schedules below. Quantity Price Marginal...
Suppose that a monopoly faces the demand, marginal revenue, and
cost schedules below.
Quantity
Price
Marginal Revenue
Marginal Cost
Average Total Cost
1
230
230
100
150
2
210
190
100
125
3
190
150
100
116.6666667
4
170
110
100
112.5
5
150
70
100
110
6
130
30
100
108.3333333
7
110
-10
100
107.1428571
8
90
-50
100
106.25
9
70
-90
100
105.5555556
10
50
-130
100
105
What quantity maximizes profit?
The monopoly Q =...
Complete Table 1 by computing the Total Revenue, Marginal Revenue, Total Cost, and Profit columns, each...
Complete Table 1 by computing the Total Revenue, Marginal
Revenue, Total Cost, and Profit columns, each rounded to two
decimal places. The cost of duplicating a video on a DVD and
mailing the DVD, the Marginal Cost, is $5.56. (1 point)
Table 1
Suggested Donation per DVD Request
Anticipated Number of DVD Requests
Total Revenue
Marginal Revenue
Total Cost
Profit
$19.00
0
$15.00
2
$9.50
5
$7.75
9
$3.00
15
$0.00
24
b. The President wants the GSTCG to provide...
Complete Table 1 by computing the Total Revenue, Marginal Revenue, Total Cost, and Profit columns, each...
Complete Table 1 by computing the Total Revenue, Marginal
Revenue, Total Cost, and Profit columns, each rounded to two
decimal places. The cost of duplicating a video on a DVD and
mailing the DVD, the Marginal Cost, is $5.56. (1 point)
Suggested Donation per DVD Request
Anticipated Number of DVD Requests
Total Revenue
Marginal Revenue
Total Cost
Profit
$19.00
0
$15.00
2
$9.50
5
$7.75
9
$3.00
15
$0.00
24
The President wants the GSTCG to provide videos to generate...
What is marginal revenue? What is marginal cost? Why is a monopolist's marginal revenue less than...
What is marginal revenue?
What is marginal cost?
Why is a monopolist's marginal revenue less than the price it
charges for its product? d) Explain why marginal revenue and
marginal cost are important determinants of a monopolist's profit
maximizing price and output. As part of your answer, explain the
process in a monopolistic market at an output below the profit
maximizing output, and at the output above, and why the profit
maximizing output is eventually chosen.
What is marginal revenue? What is marginal cost? Why is a monopolist's marginal revenue less than...
What is marginal revenue?
What is marginal cost?
Why is a monopolist's marginal revenue less than the price it
charges for its product? d) Explain why marginal revenue and
marginal cost are important determinants of a monopolist's profit
maximizing price and output. As part of your answer, explain the
process in a monopolistic market at an output below the profit
maximizing output, and at the output above, and why the profit
maximizing output is eventually chosen.
Define the following: fixed cost, variable cost, marginal cost and marginal revenue
Define the following: fixed cost, variable cost, marginal cost
and marginal revenue
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Develop a Java program that determines the gross pay for an employee. The company pays hourly...
- Discuss the four evolving company orientations. Which orientation is considered most successful and why?
- Flexible Budgeting and Variance Analysis I Love My Chocolate Company makes dark chocolate and light chocolate....
- this should be written in Java- Problem: Min/Max Search by Index Develop a program that, given...
- 2.the stock of Business Adventures sells for $70 a share. Its likely dividend payout and end-of-year...
- Provide TWO specific strategies that an equipment designer could employ to reduce heating of the temperature-sensitive...
- For fatty acid synthesis what would be the substrate if you are making an even number...
ADVERTISEMENT