Problem to handle: A company involved in mining and processing of limestone in the nation has the following supply and demand information at various price levels. 2 4 6 8 Price (USS) 10 12 Demand (Q) Tonnes 18 15 12 9 6 3 Supply (Q.) Tonnes 3 6 9 12 15 18 (a) Derive the equations for demand and supply for the limestone product. (b) Estimate the market equilibrium price and quantity. (c) Explain the price imposition by government in terms of surplus and shortages for an introduced floor price of $9 on the market. (d) By using the demand schedule, produce the total revenue (IR) curve for different quantities of limestone and explain how revenue can be maximized relative to price and quantity variations (e) If demand is increased by 40% given the supply curve, determine the new ● Demand equation Demand schedule by using the new demand equation • Equilibrium price and quantity

Problem to handle: A company involved in mining and processing of limestone in the nation has the following supply and demand information at various price levels. 2 4 6 8 Price (USS) 10 12 Demand (Q) Tonnes 18 15 12 9 6 3 Supply (Q.) Tonnes 3 6 9 12 15 18 (a) Derive the equations for demand and supply for the limestone product. (b) Estimate the market equilibrium price and quantity. (c) Explain the price imposition by government in terms of surplus and shortages for an introduced floor price of $9 on the market. (d) By using the demand schedule, produce the total revenue (IR) curve for different quantities of limestone and explain how revenue can be maximized relative to price and quantity variations (e) If demand is increased by 40% given the supply curve, determine the new ● Demand equation Demand schedule by using the new demand equation • Equilibrium price and quantity

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. The cost function for a commodity is given by C(x) - 200+12x+0.1x² (S) and the demand funct is p-300-0.02x ($/unit) where x- quantity (demanded and produced). (a) What is the profit function for this commodity? (b) Find the marginal profit function. (c) What is the marginal profit when x-10?! (d) What does this marginal profit tell you? (e) Find the level of demand at which profit is a maximum. Show how you do this using calculus. (1) What is the maximum profit, and what is the selling price that realizes this profit? Ans: R(x)-300x-0.02x², P(x)=-0.12x² +288x-200, P'(10) - 285.6 (S), approximate increase in profit from selling one more unit when sales are at 10 units, solving P'(x)-0 gives max at unit. x-1200 units, max profit - $172,600, price = 300-0.02(1200)-$276 per
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