Access over 20 million homework & study documents

Finance Final

Content type
User Generated
Subject
Finance
School
Grossmont College
Type
Homework
Rating
Showing Page:
1/10
1
FIN 321: Managerial Economics
Online Final Make up
NAME: ________________________________
RED ID: ________________________________ Please submit through blackboard all your
answers via Microsoft word/pdf and remember that this is an individual assignment and include
all references to articles and if possible, the article itself in your final document.
HONOR CODE: I pledge my honour that all work on this exam is my own and that I have
neither given aid nor received aid from another student.

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/10
2
Question 1
1a]
Demand equation is given by p=7-1.5*Q
The fixed cost is $ 1
And the variable cost is estimated to be V(Q)= 3Q+0.5*Q
2
Monopolistic firms will maximize profit in the short run. The short-run profit is given by total
revenue- total cost
Profit = T.R-T.C
Total revenue is price*cost T.R= P*Q given by
T.R =[7-1.5Q]
Q = 1.5Q-1.5Q
2
Total cost = Fixed cost+ variable cost
$1+3Q+0.5Q
2
Profit= 7Q-1.5Q
2
-[1+3Q+0.5Q
2
] this is simplified to
Profit = 4Q-2Q
2
-1
To calculate maximum profits, we find the first-order condition derivative of the equation
dП/dQ= 4-4Q and set it to zero
4-4Q=0
4q=4

Sign up to view the full document!

lock_open Sign Up
Showing Page:
3/10

Sign up to view the full document!

lock_open Sign Up
End of Preview - Want to read all 10 pages?
Access Now
Unformatted Attachment Preview
1 FIN 321: Managerial Economics Online Final Make up NAME: ________________________________ RED ID: ________________________________ Please submit through blackboard all your answers via Microsoft word/pdf and remember that this is an individual assignment and include all references to articles and if possible, the article itself in your final document. HONOR CODE: I pledge my honour that all work on this exam is my own and that I have neither given aid nor received aid from another student. 2 Question 1 1a] Demand equation is given by p=7-1.5*Q The fixed cost is $ 1 And the variable cost is estimated to be V(Q)= 3Q+0.5*Q2 Monopolistic firms will maximize profit in the short run. The short-run profit is given by total revenue- total cost Profit = T.R-T.C Total revenue is price*cost T.R= P*Q given by T.R =[7-1.5Q] Q = 1.5Q-1.5Q2 Total cost = Fixed cost+ variable cost $1+3Q+0.5Q2 Profit= 7Q-1.5Q2-[1+3Q+0.5Q2] this is simplified to Profit = 4Q-2Q2-1 To calculate maximum profits, we find the first-order condition derivative of the equation dП/dQ= 4-4Q and set it to zero 4-4Q=0 4q=4 3 Q=4/4 Q=1, We then replace Q in total revenue question to obtain maximum profit Profit= [4*1]-[2*12-1 Profit= 4-2-1 Profit=$1 To confirm whether they are maximum profits, we find the second-order condition dП/dQ= 4-4Q Second-order condition = -4−4 < 0 -4< 0; hence it satisfies profit maximization conditions. Price mc A B A.c C A.R M.R Quantity 4 1b] These profits are made in the s ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Anonymous
This is great! Exactly what I wanted.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4