The price of a product in a competitive market is $200. If the cost per unit...

The price of a product in a competitive market is $200. If the cost per unit of producing the product is 80 + 0.1x dollars, where x is the number of units produced per month, how many units should the firm produce and sell to maximize its profit?

Solutions

Expert Solution

The price of a product in a competitive market is $200.

Revenue is given by

Cost per unit of producing the product is dollars, where x is the number of units produced per month.

Cost is given by

Profit function is given by

When profit is maximum,

That is

For maximum profit, 600 units should be produced.

----------------------------------------------------------------------------

milcah answered 1 year ago

Next > < Previous

Related Solutions

Question. Currently the unit selling price of a product is $200, the unit variable cost is...

Question. Currently the unit selling price of a product is $200, the unit variable cost is $110, and the total fixed costs are $585,000. A proposal is being evaluated to increase the unit selling price to $275. Under the proposed plan, the variable cost per unit and the total fixed cost will not change. Current Scenario [7 Points]: 1) Calculate the contribution margin per unit. 2) Calculate the contribution margin ratio. 3) Calculate the breakeven point in units under the...

1) Weatherspoon Company has a product with a selling price per unit of $200, the unit...

1) Weatherspoon Company has a product with a selling price per unit of $200, the unit variable cost is $110, and the total monthly fixed costs are $300,000. How much is Weatherspoon’s contribution margin per unit? a. $ 90 b. $110 c. $200 d. $300 2) An Italian bakery on Franklin Avenue in Hartford is famous for its cakes. The bakery sells its cakes for $19.95 to the public. The cost for the ingredients and labor to make the cake...

Suppose that a perfectly competitive firm faces a market price of $5 per unit, and at...

Suppose that a perfectly competitive firm faces a market price of $5 per unit, and at this price, the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curve at an output level of 1,500 units. If the firm produces 1,500 units, its average variable costs equal $5.50 per unit, and its average fixed costs equal $0.50 per unit. What is the firm's profit-maximizing (or loss-minimizing) output level? nothing. (Enter your response as a whole number long dash—...

A competitive firm sells its product at a price of $ 10 per unit. Its total...

A competitive firm sells its product at a price of $ 10 per unit. Its total is: TC = 5 -0.5q + 0.001q2(q square) where TC is total cost ($) and q is output rate (units per time period) a) Calculate the firm’s profit maximizing quantity. Is the firm earning a profit? b) Is the firm in the long run in part (a). If not, what do you think will happen in the longrun? c) What is the supply curve...

A firm’s product sells for $2 per unit in a highly competitive market. The firm produces...

A firm’s product sells for $2 per unit in a highly competitive market. The firm produces output using capital (which it rents at $75 per hour) and labor (which is paid a wage of $15 per hour under a contract for 20 hours of labor services). Complete the following table and use the information to answer the questions that follow. Table 1 K L Q MP(K) AP(K) AP(L) VMP(K) 0 20 0 1 20 50 2 20 150 3 20...

In a perfectly competitive market, firms always operate at the lowest per-unit cost. Is the preceding...

In a perfectly competitive market, firms always operate at the lowest per-unit cost. Is the preceding statement true or false? Requirement 250 words or more

“In a perfectly competitive market, firms always operate at the lowest per-unit cost.” Is the preceding...

“In a perfectly competitive market, firms always operate at the lowest per-unit cost.” Is the preceding statement true or false? Explain your answer. For a perfectly competitive firm, profit maximization does not conflict with resource allocative efficiency. Do you agree? Explain your answer. The perfectly competitive firm does not increase its quantity of output without limit, even thought it can sell all it wants at the going price. Why not? Why is the marginal revenue curve for a perfectly competitive...

Warner Ltd sells its only product at a price of $200 per unit. Variable costs are...

Warner Ltd sells its only product at a price of $200 per unit. Variable costs are $160 per unit and total fixed costs are $208 000. Current annual sales are 6500 units. A. What is the company’s break-even point in sales units? , What is the break-even point in sales dollars? B. What is the company’s margin of safety? C. Calculate the company’s profit under the following situations. Treat each case as independent of the others. 1. Variable costs increase...

Standard Enterprises produces an output that it sells in a highly competitive market at a price of $100 per unit.

Standard Enterprises produces an output that it sells in a highly competitive market at a price of $100 per unit. Its inputs include two machines (which cost the firm $50 each) and workers, who can be hired on an as-needed basis in a labor market at a cost of $2,900 per worker (wage). Based on the following production data, how many workers should the firm employ to maximize its profits? (hint: completing the table below will give you the answer)MachinesWorkersOutputMarginal...

Lower-of-Cost-or-Market Inventory On the basis of the following data: Product Inventory Quantity Cost per Unit Market...

Lower-of-Cost-or-Market Inventory On the basis of the following data: Product Inventory Quantity Cost per Unit Market Value per Unit (Net Realizable Value) Model A 13 $198 $223 Model B 42 63 56 Model C 36 126 144 Model D 13 241 237 Model E 33 144 152 Determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 9. Inventory at the Lower of Cost or Market Product Total...

Subjects