Assume P=$500-$4Qd and our fixed cost is $1000 and the variable cost is $12 per unit....

Question

Question

Assume P=$500-$4Qd and our fixed cost is $1000 and the variable cost is $12 per unit.

In Excel, determine the relevant range of quantity for this problem. Create the necessary columns to determine breakeven and graph the outcome.

Answer 1

Answer #1

We use the excel to create a table for different quantities and find that at breakeven TR = TC.

Here TR = 500Q - 4Q^2 and TC = 1000 + 12Q. TR = TC gives Q = approximately 2 units.

The second break even occurs at Q = 119 units.

Profit is maximum at Q = 61 units when MR = MC gives 500 - 8Q = 12 or Q = 488/8 = 61 units

Profit maximization 18000 Profit is maximum at 61 units 16000 14000 12000 10000 Revenue and cost 8000 6000 4000 2000 o 20 40

Answer 2

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