# Managerial Economics - Assignment PDF

6 Pages867 Words98 Views
|
|
|
MANAGERIAL ECONOMICS 1
MANAGERIAL ECONOMICS
Student Name
Institutional Affiliation
Facilitator
Course
Date
MANAGERIAL ECONOMICS 2
Question 12
QD = 240 – 20P
QD = Quantity demanded = Q while P = Price
20P = 240 – Q
P = 12 – 1/20Q
From the equation above, the following values in the table have been calculated for the demand
curve:
P 0 12 6 3
Q 240 0 120 180
The marginal revenue is calculated by finding the total revenue derivative
TR = P * Q = (12 – 1/20Q) * Q = 12Q – 1/20Q2
MR = d TR/ d Q = 12 – 2/20Q ; hence the marginal revenue curve is two times steeper the
demand curve
The following values have been calculated for the marginal revenue:
MR 12 0 6 3
Q 0 120 60 90
MC = Change in TC/ Change in quantity produced
ATC = TC/Quantity produced
AVC = VC/Quantity produced
Given Q = 80, P = 12 – ((1/20)80) = 8
MANAGERIAL ECONOMICS 3
ATC = 10 and AVC = 6
Firms maximize their profits at a point whereby the marginal cost equals the marginal revenue
(Demsetz 2013, p.375).
Given Q = 80, the marginal revenue is MR = 12 – ((2/20)80) = 4
a. The graph is as shown below:
b. In the short run period, the firm makes profit. The profit made is calculated below:
Profit made = (calculated price at quantity Q which is given as 80 minus the average variable
cost which is 6) * the quantity given which is 80
Profit = (P - 6) * Q = (8 - 6) * 80 = \$ 160

## End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
|28
|4338
|142

|16
|2528
|201

|7
|728
|127

|13
|3088
|83

|12
|1294
|481

|10
|1433
|20

### Support

#### +1 306 205-2269

Chat with our experts. we are online and ready to help.