Final Case Study

Formulas and Steps to Solve for Q & P:

1. Total Cost = 20Q 6Q^2 + Q^3 2. Solve for Marginal Cost = Change Total Cost / Change Q Note - Marginal Cost = Derivative of Total Cost = f(Q) 3. Solve for AVC: Average Variable Cost = Total Cost / Q 4. Solve for Q: Average Variable Cost = Marginal Cost 5. Solve for P: Average Variable Cost or Marginal Cost

Final Case Study The break-even point can be defined as the production and sales levels of a given product at which the revenue generated from the sales is perfectly equal to the production cost. At this point, the company does not make any profit or loss; that is, it breaks even. The shut-down point refers to the minimum price where companies prefer shutting down their operation instead of continuing to operate. In other words, it is the minimum price and quantity for keeping operations open. As seen previously, the break-even point is the point where the marginal cost (MC) equals the average total cost (ATC). The shut-down point of production, on the other hand, is the price at which the marginal cost does not even cover the average variable cost (ATC). At this point, the company is better off stopping its production than keeping to produce at a loss. Suppose the hospital operates in a perfectly competitive market. The market price of this product is $40. Assume that a manufacturing company Total Cost (TC) function is TC=20Q6Q2+Q3 What is the minimum market price for which you will choose to produce? Final Case Study The break-even point can be defined as the production and sales levels of a given product at which the revenue generated from the sales is perfectly equal to the production cost. At this point, the company does not make any profit or loss; that is, it breaks even. The shut-down point refers to the minimum price where companies prefer shutting down their operation instead of continuing to operate. In other words, it is the minimum price and quantity for keeping operations open. As seen previously, the break-even point is the point where the marginal cost (MC) equals the average total cost (ATC). The shut-down point of production, on the other hand, is the price at which the marginal cost does not even cover the average variable cost (ATC). At this point, the company is better off stopping its production than keeping to produce at a loss. Suppose the hospital operates in a perfectly competitive market. The market price of this product is $40. Assume that a manufacturing company Total Cost (TC) function is TC=20Q6Q2+Q3 What is the minimum market price for which you will choose to produce? Final Case Study Rubric: 25% - Requirements (Definitions of Terms) 20% - Analysis (Show Detailed Equation Steps) 15% - Recommendations (Correct Answer Q \& \$) 10% - Style / Grammar (Word Document) 10\% - APA (Times New Roman-12, Double-Spaced) 10% - Representation (3+ References Required) 10% - Interpretation (Quantity \& Price on Graph) Formulas and Steps to Solve for Q \& P : 1. Total Cost =20Q6Q2+Q3 2. Solve for Marginal Cost = Change Total Cost / Change Q Note - Marginal Cost = Derivative of Total Cost =f(Q) 3. Solve for AVC: Average Variable Cost = Total Cost /Q 4. Solve for Q: Average Variable Cost = Marginal Cost 5. Solve for P: Average Variable Cost or Marginal Cost