I have a question to see if any of you can solve it..here it goes..
Bavarian Designs and produces lead crystal wine decanters for export to international markets. The production manager of Bavarian Crystal works estimates total and marginal production costs to be
TC=10,000+40Q+0.0025Q^2
and
MC=40+0.005Q
where costs are measured in US dollars and Q is the number of wine decanters produced annually. Because Bavarian Crystal Works is only one of many crystal producers in the world market, it can sell as many decanters as it wishes for $70 a piece. Total and marginal revenue are
TR=70Q
MR=70
Where revenues are measured in US dollars and Q is the number of wine decanters produced annually.
1.What is the optimal level of production of wine decanters? What is the marginal cost from the last wine decanter sold? Show work.
2.What are the total revenue, total cost, and net benefit (profit) from selling the optimal number of wine decanters? Show work.
3.At the optimal level of production of decanter can be sold for $70, thereby increasing revenue by $70. Why does the manager of this firm not produce and sell one more unit?
Bavarian Designs and produces lead crystal wine decanters for export to international markets. The production manager of Bavarian Crystal works estimates total and marginal production costs to be
TC=10,000+40Q+0.0025Q^2
and
MC=40+0.005Q
where costs are measured in US dollars and Q is the number of wine decanters produced annually. Because Bavarian Crystal Works is only one of many crystal producers in the world market, it can sell as many decanters as it wishes for $70 a piece. Total and marginal revenue are
TR=70Q
MR=70
Where revenues are measured in US dollars and Q is the number of wine decanters produced annually.
1.What is the optimal level of production of wine decanters? What is the marginal cost from the last wine decanter sold? Show work.
2.What are the total revenue, total cost, and net benefit (profit) from selling the optimal number of wine decanters? Show work.
3.At the optimal level of production of decanter can be sold for $70, thereby increasing revenue by $70. Why does the manager of this firm not produce and sell one more unit?