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Cost and Production Q_D P 0 2,500 10,000 2,300 20,000 2,100 30,000 1,850 40,000 1,600 50,000 1,480 60,000 1,450 70,000 1,360 80,000 1,200 90,000 1,000

Cost and Production

Q_D

P
0

2,500

10,000

2,300

20,000

2,100

30,000

1,850

40,000

1,600

50,000

1,480

60,000

1,450

70,000

1,360

80,000

1,200

90,000

1,000

100,000

800

Q FC VC TC MC AFC AVC ATC Profit Q_D P TR AR MR Change in Q Change in P Elasticity Profit
0 10,000,000 0 10,000,000 - - - - - 0 2,500 -
10,000 10,000,000 8,000,000 18,000,000 800 1,000 800 1,800 5,000,000 10,000 2,300 23,000,000 2,300 2,300 2 (0.08) -24.000000000000 5,000,000
20,000 10,000,000 15,000,000 25,000,000 700 500 750 1,250 17,000,000 20,000 2,100 42,000,000 2,100 1,900 0.66666667 (0.09) -7.333333333333 17,000,000
30,000 10,000,000 21,000,000 31,000,000 600 333 700 1,033 24,500,000 30,000 1,850 55,500,000 1,850 1,350 0.4 (0.13) -3.160000000000 24,500,000
40,000 10,000,000 23,000,000 33,000,000 200 250 575 825 31,000,000 40,000 1,600 64,000,000 1,600 850 0.28571429 (0.14) -1.971428571429 31,000,000
50,000 10,000,000 32,000,000 42,000,000 900 200 640 840 32,000,000 50,000 1,480 74,000,000 1,480 1,000 0.22222222 (0.08) -2.851851851852 32,000,000
60,000 10,000,000 45,000,000 55,000,000 1,300 167 750 917 32,000,000 60,000 1,450 87,000,000 1,450 1,300 0.18181818 (0.02) -8.878787878788 32,000,000
70,000 10,000,000 58,000,000 68,000,000 1,300 143 828.5714 971 27,200,000 70,000 1,360 95,200,000 1,360 820 0.15384615 (0.06) -2.401709401709 27,200,000
80,000 10,000,000 75,000,000 85,000,000 1,700 125 937.5 1,063 11,000,000 80,000 1,200 96,000,000 1,200 80 0.13333333 (0.13) -1.066666666667 11,000,000
90,000 10,000,000 95,000,000 105,000,000 2,000 111 1055.556 1,167 (15,000,000) 90,000 1,000 90,000,000 1,000 (600) 0.11764706 (0.18) -0.647058823529 (15,000,000)
100,000 10,000,000 120,000,000 130,000,000 2,500 100 1200 1,300 (50,000,000) 100,000 800 80,000,000 800 (1,000) 0.10526316 (0.22) -0.473684210526 (50,000,000)
  1. Is the QProf-Maxthe same numerical value as the QATC-MinOR QTR-Maxthat you computed in the previous part?If not, what is the mathematical relationship among the three? (Put the relationships among them by using inequality signs, like A>B>C.)
  2. If you are a rational producer, which scale of operation(which of the above-mentioned Q's) do you chooseto operate on? In other words, what is the optimal scale of operation for your business, given the technology that you have and given the current market demand for your product?
  3. DoesQProf-Maxminimizeyourper-unitcostofproduction(akaATC)?
  4. DoesQProf-MaxmaximizeyourTotalRevenue (TR)?
  5. Then, why do you still choose the QProf-Maxas the optimal point of operation? (Why do you choose this Q andnot any of the other two Q's?)
  6. Now, pleaselook at thetwo comprehensive tables that you have madein the previous parts (Parts d and a).In particular, look at the numerical values of MCand MRassociated with your optimal scale of operation.

  1. HowmuchistheMCassociatedwiththeQProf-Max?
  2. HowmuchistheMRassociatedwiththeQProf-Max?
  3. Now, look at the MC and MRcorresponding with the QProf-Max. What is the relationshipbetweenthese two?
  4. Is this the relationship that you expected to be the case at this Quantity? In other words, do these two answers remind you of any 'optimality condition' that we have studied in this course? If so, which condition?

  1. In Chapter 15, we learned that a monopoly does not have a supply curve, but instead, it does have a supply point.Whereisthesupplypointofyour company?Thatis,whatisthequantitysuppliedof Polymerconcrete by your company? How did you find this supply point? What is the price associated with this quantity supplied?
  2. Now,pleasecomputethe"rateofprofit"(simplydefinedas (Profit/TC)*100%)for eachof QATC-Min,QTR-Max, and QProf-Maxand rank and report them in your Excel file.
  3. If you are a rational producer, which scale of operation do you choose to operate on when you look at "the rates of profits" (which youcomputedin Part "t") and"total amounts of profits" (which you computed in Part "l")? Why?
  4. Now, do you better understand the connections and applications of the theories how has it helped you>?

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