Ty's Sporting Goods is considering rewarding employees with profit sharing for good performance. Without the sharing plan, Ty's total cost function is: TC(Q) = 250Q +
and his marginal cost function is: MC(Q) = 250 +
. Ty can sell all his output for $500. Calculate Ty's optimal output level. What is his level of profits? If Ty implements the profit sharing plan, his total cost function is: TC(Q) = 125Q +
and his marginal cost function is: MC(Q) = 125 +
. If the profit sharing plan entitles his employees to 25% of the profits, should Ty institute the plan?

Question

Ty's Sporting Goods is considering rewarding employees with profit sharing for good performance. Without the sharing plan, Ty's total cost function is: TC(Q) = 250Q +  
and his marginal cost function is: MC(Q) = 250 +  
. Ty can sell all his output for $500. Calculate Ty's optimal output level. What is his level of profits? If Ty implements the profit sharing plan, his total cost function is: TC(Q) = 125Q +  
and his marginal cost function is: MC(Q) = 125 +  
. If the profit sharing plan entitles his employees to 25% of the profits, should Ty institute the plan?

Quizplus · Accepted Answer

The Answer of Ty's Sporting Goods is considering rewarding employees with profit sharing for good performance. Without the sharing plan, Ty's total cost function is: TC(Q) = 250Q +  
and his marginal cost function is: MC(Q) = 250 +  
. Ty can sell all his output for $500. Calculate Ty's optimal output level. What is his level of profits? If Ty implements the profit sharing plan, his total cost function is: TC(Q) = 125Q +  
and his marginal cost function is: MC(Q) = 125 +  
. If the profit sharing plan entitles his employees to 25% of the profits, should Ty institute the plan?

Ty's Sporting Goods Is Considering Rewarding Employees with Profit Sharing