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6. The material, equipment, and labor costs for the production of the first unit of a new device developed by your firm are given in

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6. The material, equipment, and labor costs for the production of the first unit of a new device developed by your firm are given in the table below in liras. It is estimated that the labor cost is subject to learning effects up to the 1000" unit manufactured (after which learning will stop), with a learning curve parameter estimated at 0.95. What would be the manufacturing cost of the product once the costs stabilize? (15 points) Part Quantity Price Activity Name Labor Wage A Machine Shop 25 B 50 Assembly 25 C Inspection 25 D 15 Overhead Cost - 75% x Labor Cost For 1 Device For 10 Devices 7. The price-demand relation for a certain product is given by P = 200 - 0.025P - 30,000/P, where D denotes the number of units sold at price level P. The total cost for the same product can be expressed by CT = 25,000 + 50D, where the first term captures fixed cost of production and the second captures variable costs. Write down the profit function for this product and determine (a) the profit-maximizing price and demand levels and (b) the maximum profit the firm can extract from the sale of this product? (15 points)

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