PA04MBA10 April 7‚ 2005 1. Total profit is the product of profit per unit and the quantity. To maximize profit‚ quantity is chosen at the point where marginal cost (MR) is equal to marginal revenue (MR) which is where the two graphs intersect. This is the ideal situation to a profit seeking company. Since price is greater than the Average Total Cost (ATC)‚ for each unit sold the profit per unit is simply the value by which the price exceeds the ATC. To maximize profit the firm should continue production
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Chapter 10 (Tentative Due Date: by November 1) Question 2: Discuss the major barriers to entry into an industry. Explain how each barrier can foster either monopoly or oligopoly. Which barriers‚ if any‚ do you feel give rise to monopoly that is socially justifiable? LO1 The major barriers to entry in an industry are economies of scale‚ legal barriers such as patents & licenses and other strategic or pricing barriers. Economies of scale occur only in large firms who are able to reach a minimum
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1000 cases of Riesling. (12 bottles of wine in each case) Jaeger needs to make a decision to maximize the profit and minimize the loss depending on the possible risk of the approaching storm. In order for him to decide whether to harvest the Riesling grapes immediately or after the storm‚ there are five important factors that might help him to make a wise decision: time‚ price‚ profit‚ quality‚ and reputation. As we know‚ “the cost to the winery was about the same for each of the possible styles
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the BodyPlus 200. BFI‚ Better Fitness‚ Inc. is a manufacturer of exercise equipment for the home exercise market. A recent spark in interest‚ due to BFI’s trade show promotion of BodyPlus 100 & BodyPlus 200‚ has given BFI a great opportunity to profit off of its two newest products. In order to find the most beneficial benchmarks‚ BFI needs to determine the correct amount of each product they need to produce. The two exercise machines require different inputs: the first of the two‚ the BodyPlus
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to be taken. Two American companies‚ National China Company and Semmelback‚ Semmelback and Whittacker‚ have shown interest to promote the brand in the American market. After assessing the important criteria like‚ company profile‚ growth‚ marginal profit‚ security offered‚ risks involved‚ brand building etc. it seems appropriate that our company forms an alliance with Semmelback‚ Semmelback and Whittacker to promote its product in the global market. Situation Analysis:
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Find the total profit for 20‚000 units: Rev (20‚000) = (-1/20‚000)(20‚000)^2 + 3(20‚000) Rev = $40‚000 Cost (20‚000) = 5000 + 0.56(20‚000) = $16‚200 Profit = Rev – Cost Profit = 40‚000 – 16‚200 Profit = $23‚000 is the total profit for 20‚000 units Price = 40‚000/20‚000 = $2.00 is the price for 20‚00 units Find the total profit for 24‚400 units: Rev (24‚400) = (-1/20‚000)(24‚400)^2 + 3(24‚400) Rev = $43‚432 Cost (24‚400) = 5000+ 0.56(24‚000) = $18‚664 Profit = Rev – Cost
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Profit vs. Not-for-Profit Organization A nonprofit organization is formed for the common good of the public. Nonprofit organizations are usually formed for some specific religious‚ charitable or educational purpose. A for-profit organization may be formed to conduct any number of lawful business activities. The primary reason to form a for-profit organization is to earn a profit for the owners of the company. Use of Profits Since a not-for-profit organization is formed to accomplish a specific
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that point where I can tell on the x-axis is 55 DVDs per day. The y-axis is $1.75 per DVD. To maximize profit 55 DVDs need to be sold to rent per day to maximize profit. B. What is the economic profit for this firm operating where economic profit is maximized? The point on which profit has been maximized as stated in part A is 55 DVDs and cost per DVD at this point is $1.75 so profit will be ….. 55 X $1.75 = $96.25 C. Will this firm likely continue operating in the long run? Briefly
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There a many factors that a company will review before knowing the maximum profit that can be obtained for their industry. Marginal revenue‚ marginal cost‚ total cost and profit-maximizing are some of the concepts that are analyzed when making business production decisions. Marginal revenue is the total revenue that is changed when one more unit of output is produced. The total revenue is determined by multiplying the unit price by what quantity the company can sell. The total revenue increases
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for a $250 profit. Each alternator requires 3 hours of wiring and 2 hours of testing and can be sold for a $150 profit. There are 260 hours of wiring time and 140 hours of testing time available in the next production period and electrotech wants to maximize profit. (A) Formulate an LP model for this problem. Decision Variable X1 = Generator X2 = Alternator Obj. = Maximum Profit X1 | X2 | Time | Activity | 2 | 3 | 260 | Wiring | 1 | 2 | 140 | Testing | Max. Profit = 250X1 +
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