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Homework Assignment 1 You must show all your work to earn points ECON 3125 SP19 Name: 1. Use the graph below to answer the questions: 80 70 50 40 30 20 10 State the equation for the demand curve (inverse demand function) shown in the graph above using the format P.-a-bQ a. b. State the equation for the demand function implied in the graph using the format Q.-c-dP c. Find the equation for Total Revenue, where TR is a function of output (Q): d. Find the equation for Marginal Revenue, where MR is a function of output (Q): e. If MC-20, find the output level that maximizes Total Revenue: f IfMC- 20, find the output level that maximizes Total Profit: Due date: Thursday 1/31 at the time of class
Homework Assignment 1 You must show all your work to earn points ECON 3125 SP19 Name: 2. Suppose that a firm faces the demand curve, P- 300 - 40, where P denotes price in dollars and Q denotes total unit sales. The cost equation is TC-300+920 a. Determine the firms profit-maximizing output and price. 2 points b. Given the output (Q) value from part a, compute Total cost and Marginal cost when the cost equation is TC- 300+92Q: I point c. Suppose that there is a change in the production process so that the cost equation becomes TC = 1.800 + 10Q + Q, Compute the new Total cost and Marginal cost at the same output level (Q value) from part a: 1 point Determine the firms new output and price level when the cost equation is TC = 1,500 + 100+Q and the demand curve remains P 300-40 d. 2 points e. Using your answers to part b and c, explain why the profit maximizing quantity changed in I point your answers to part a and part d: Due date: Thursday 1/31 at the time of class
Homework Assignment 1 You must show all your work to earn points ECON 3125 SP19 Name: 3. A U.S. textbook publisher is introducing a new economics textbook, Managerial Economics I is no Graphing matter, to the domestic market. Each book is produced at a constant marginal cost of 598 per book. Management predicts that annual domestic demand for the book is P.- 278-0.3Q, where Po- price of a book in dollars, and Q denotes the number of books (as measured in thousands). Assuming no costs beyond the MC of $98 per book, state the profit equation for the domestic market: a. 1 polet b. State the marginal profit equation for the domestic market: 1 point c. Determine the optimal quantity and price of the book in the domestic market: 2 points d. Using your answers to parts a and b, compute the total profit in the domestic market assuming no fixed costs: I point 4. No Name University has a successful football team, the Lethargic Leeches, and sells tickets to students, alumni, and the public. Experience has shown that attendance has followed the demand relationship: Q-28,000-2,000P 1 point IfNo Name U charges $7 per ticket, predict attendance (Q). a. c. Now, assume that the current capacity of the football stadium is 10,000 seats, what tieket I point price should be set for the stadium to be sold-out? Due date: Thursday 1/31 at the time of class
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