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Topic:

Solve Economics Questions: Quantity Produced by Woodard to Maximize the Profit (Math Problem Sample)

Instructions:

Solve the economics problems

source..
Content:
Name
Course
Instructor
* Marginal cost curve
Marginal cost curve= dTC /dQ
= -1000+200Q
* Woodard’s marginal revenue function
Marginal revenue function=dTR/ dQ
Total revenue=P*Q
TR= 30000*Q=30000Q
* quantity produced by Woodard to maximize the profit
Profit=TR-TC
TR=30000Q
TC=500,000 -1,000Q + 100Q2
Ï€=30000Q-(500,000 -1,000Q + 100Q2)
Ï€=31000Q-500000-100Q2
d π/dQ= 31000-200Q
200Q=31000
Quantity produced by Woodard=155
Profit=31000(155)-50000-100(1552) =$2,352,500
* If Woodard Inc. chooses the profit maximizing level of production for a monopolist, output they will they produce.
The monopolist's profit-maximizing level of output is found by equating its marginal revenue with its marginal cost,
MR=MC
TR= (40,000 - $20.50Q) Q
40000Q-20.50Q2
MR=40000-41Q
MC=-1000+200Q
40000-41Q=-1000+200Q
41000=241Q
Q=170
* Given the output calculated in part d, the price will they be able to charge as a monopolist
p=40,000 - $20.50Q=40,000-20.50(170)
Price=36515
* Given that the price was $30,000 before the other firm went out of business, and assuming that there was no unmet demand at this price, how much total production was occurring in the market? Now that there is only one firm, how much has consumption decreased?
TOTAL market demand curve was P = 40,000 - $20.50Q
Price$-30000
30000=40000-20.50Q
10000=20.50Q
Q=488
The total production was=488 units
Current production=170 units
Decrease in consumption=488-170=318 units
* What I can say about the relative costs of the firm that went out of business compared to Woodard Inc.
What I can say about the large firm that went out of business is that the firm was operating at the point where the marginal costs were more than the marginal revenue. This means that the firm was not in a position ...
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