(a)
TR = P x Q
MR = Change in TR / Change in Q
P | Q | TR | MR |
0 | 100 | 0 | |
20 | 80 | 1600 | -80 |
40 | 60 | 2400 | -40 |
60 | 40 | 2400 | 0 |
80 | 20 | 1600 | 40 |
100 | 0 | 0 | 80 |
Profit is maximized when MR = MC = 20.
When Q = 40, MR < MC and when Q = 20, MR > MC.
So Q = 20 and P = 80.
Profit = Q x (P - MC) - TFC = 20 x (80 - 20) - 1,000 = (20 x 60) - 1,000 = 1,200 - 1,000 = 200
(b)
Since profit > 0, it will attract entry of new firms.
(c)
In long term, higher number of firms will decrease demand for Sara's firm and this will continue until Sara earns zero economic profit.
1.- Sara is a businesswoman who has established a web page where people can design and...
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Please indicate the correct answer and explain. Thank you!
Kali is a dot-com entrepreneur who has established a Web site at which people can design and buy aring. Kali pays $600 a month for a Web server and Internet connection. The rings that customers design are made to order by another firm, and Kali pays this firm $40 a ring. Kali has no other costs The table shows the demand schedule for Kalis rings Price dollars per ring) 200 160...
i don't understand how to do this can someone please
help?
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Read below and answer, Why does a business that has profit of
$30,000 per year need a bank loan?
Jones Electrical Distribution After several years of rapid growth, in the spring of 2007 Jones Electrical Distribution anticipated a further substantial increase in sales. Despite good profits, the company had experienced a shortage of cash and had found it necessary to increase its borrowing from Metropolitan Bank-a local one- branch bank-to $250,000 in 2006. The maximum loan that Metropolitan would make...
Please read the facts of the case and prepare answers for the
following questions :
1 – What is the relevance of the $2,000 monthly payment
to Dave Verden on the analysis of Jones’ financing needs?
2 – What metrics could you use to compare the historical financial
results for Jones with the projected financial results under the
four defined scenarios?
3 – Other than financing needs, what other issues should Jones
address as he considers the different growth
scenarios?...