Answer the question on the basis of the following demand and cost data for a specific firm.Demand DataCost Data(1) Price(2) Price(3) QuantityOutputTotal Cost$ 10.50$ 10.0066$ 6110.008.8577629.508.0088649.007.0099678.506.101010728.005.001111797.504.15121286Suppose that entry into the industry changes this firm's demand schedule from columns (1) and (3) to columns (2) and (3).Economic profit willMultiple Choicefall to $4.decline to zero.increase by $6.fall by $8.

We must compare the firm's profit before and after admission into the industry in order to assess…

Answered: Answer the question on the basis of the…

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter5: Buying The Necessities

Section: Chapter Questions

Problem 20AA

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A local company is planning to manufacture and market a four-slice toaster. For this toaster, the research department’s estimates are aweekly demand of 300 toasters at a price of $25 per toaster and a weekly demand of 400 toasters at a price of $20. The financial department’s estimates are fixed weekly costs of$5,000 and variable costs of $5 per toaster. a) Assume that the relationship between price ? and demand ? is linear. Use the research department’s estimates to express ? as a function of ? and determine the domain of the function. b) Using your knowledge from Finite Math, determine the Revenue function in terms of ?. c) Determine the Marginal Revenue at 2 different production levels for example 250 and 500 units. Interpret these results. (HINT: Consider what a positive or negative first derivative implies) d) Assume that the cost function is linear. Use the financial department’s estimates to express the cost function interms of ?. e) Determinethe Marginal costand interpret the…

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