In this Essay I am going to explain the relationship between marginal revenue and marginal cost, and the importance of these concepts for profit maximization. One approach for profit maximization is by looking at the total revenue (TR) to total cost (TC). This is where the quantity being generated is yielding the greatest difference between the TR and the total TC. Another approach is using marginal revenue (MR) to marginal cost (MC). MR is the increase in revenue that results from the sale
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Find an equation of the tangent to the curve y(x) = x2 - 3x + 2 at the point (1, 2). Question 1 options: | 1) | x + y = 3 | | | 2) | 2x - y = 3 | | | 3) | y = 2 | | | 4) | x - y = 3 | | Save Question 2 (1 point) Find an equation of the tangent to the curve f(x) = 2x2 - 2x + 1 that has slope 2. Question 2 options: | 1) | y = 2x | | | 2) | y = 2x + 1 | | | 3) | y = 2x + 2 | | | 4) | y = 2x - 1 | | Save Question 3 (1 point)
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only difference is who is selling them. They differ from a small business to a larger business or corporation. When there are many companies selling the same product the market will dictate the price of the product. Marginal cost and marginal revenue In order to increase the marginal revenue it is important to understand the price equilibrium. A business needs to analyze data of the competitors to make sure that they are keeping their price lower and keeping the customers happy. Keeping the prices
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equivalent products. The demand function for the computer has been estimated to be P = 2,500 - .0005Q The marginal (and average variable) cost of producing the computer is $900. a. Compute the profit-maximizing price and output levels assuming Pear acts as a monopolist for its product. Answer: The monopolist would equate marginal revenue (MR) with marginal cost (MC) Total revenue (TR) = P*Q = 2500Q-Q^2 MR = dTR/dQ = 2500-2Q We have MC = 900 So MR= MC implies 2500-2Q=
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PROBLEM: COST OF CAPITAL 1. Cost of debt: ki = 9%(1 - 0.4) = 5.4% for the first $50 million ki = 10%(1 - 0.4) = 6% for debt exceeding $50 million. Cost of equity: (g = 7.2% using the Rule of 72) ke = $1.415/$21 + .072 = .139 or 13.9% for internal equity ke' = $1.415/$19 + .072 = .146 or 14.6% for external equity 2. Size of first interval: $50 million first mortgage bonds/0.40 = $125 million. (Balance of first block of funds is retained earnings with a cost of 13
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produce and how they behave with respect to various elevations of marginal revenue. In my attempt it will be appropriate for me to clarify the definitions of various economic terms in order to assure a proper understanding of my thoughts on this topic, I will provide these definitions throughout. Understanding the concept of profit maximization lies with the explanation of total revenue to total cost and marginal revenue to marginal cost. Total revenue is nothing more than the total quantity of a
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Private Grant Discounting tuition towards disaster. Study the effects of college tuition discounting. Findings indicated that: 1. At least 1/4 of the colleges and universities used discounting strategies that resulted in large losses of tuition revenue 2. Institutions with the greatest increases in discount rates raised their spending on institutional grants by $3,375 per undergraduate, but their tuition and fee revenue grew by just $3,069; 3. Discounting strategies do not appear
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A monopolistically competitive company reaches the maximum-profit output at the point where marginal revenue (MR) is equal to marginal cost. Profit will be greater than marginal cost and average total cost. At this point, profits cannot be increased by changing the production level. Increases in production will cause a decline in profits, because it adds more to cost. Decreasing production will decrease revenue, since there will less inventory to sell. The profits shown in this
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A. The profit maximization approach using total revenue to total cost is determined by using the formula Profit = TR-TC. When total revenue exceeds total cost you will have a profit but when total cost exceeds total revenue you have a loss. In the graph below you can see at 8 units is where the maximum profit would be. After 8 units are produce you see the effect of diminishing returns as your profit for each unit produced gets smaller and smaller until it hits 15 units and you are now taking a loss
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Shandell N. Coleman January 26, 2012 Eco Hmwk # 3 Chapter 5: 1. A firm in a perfectly competitive market invents a new method of production that lowers its marginal cost. What happens to its output? What happens to the price it charges? a. The firm has an employee who threatens to tell all other firms in the industry about how to implement this new technique. Will it be possible to bribe the employee not to do this? Explain why or why not? b. Why should this employee probably not choose
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