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Managerial Economics 13th Edition by James McGuigan,Charles Moyer,Frederick Harris
Edition 13ISBN: 978-1285420929Managerial Economics 13th Edition by James McGuigan,Charles Moyer,Frederick Harris
Edition 13ISBN: 978-1285420929 Exercise 4
The Poster Bed Company believes that its industry can best be classified as monopolistically competitive. An analysis of the demand for its canopy bed has resulted in the following estimated demand function for the bed:
P = 1760 - 12Q
The cost analysis department has estimated the total cost function for the poster bed as
a. Calculate the level of output that should be produced to maximize short-run profits.
b. What price should be charged
c. Compute total profits at this price-output level.
d. Compute the point price elasticity of demand at the profit-maximizing level of output.
e. What level of fixed costs is the firm experiencing on its bed production
f. What is the impact of a $5,000 increase in the level of fixed costs on the price charged, output produced, and profit generated
P = 1760 - 12Q
The cost analysis department has estimated the total cost function for the poster bed as
a. Calculate the level of output that should be produced to maximize short-run profits.
b. What price should be charged
c. Compute total profits at this price-output level.
d. Compute the point price elasticity of demand at the profit-maximizing level of output.
e. What level of fixed costs is the firm experiencing on its bed production
f. What is the impact of a $5,000 increase in the level of fixed costs on the price charged, output produced, and profit generated
Explanation
Verified
Verified
a) Profit maximizing output
Total re...
Managerial Economics 13th Edition by James McGuigan,Charles Moyer,Frederick Harris
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