Purchase Solution

Marginal Cost Curve for Ajax Cleaning Products

Not what you're looking for?

Ask Custom Question

Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one very large firm-Tile King. Ajax produces a multi-headed tunnel wall scrubber that is very similar to a model produced by Tile King. Ajax has decided to charge the same price as Tile King to avoid the possibility of a price war. The price charged by tile King is $20,000.
Ajax has the following short-run cost curve:
TC=800,000 - 5,000 Q + 100Q 2

a.Compute the marginal cost curve for Ajax
b.Given Ajax's pricing strategy, what is the marginal revenue function for Ajax?
c.Compute the profit-maximizing level of output for Ajax
d.Compute Ajax's total dollar profits.

Purchase this Solution
Solution Summary

The expert computes the marginal cost curve.

Solution Preview

See the attached file. Thanks

Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one very large firm-Tile King. Ajax produces a multi-headed tunnel wall scrubber that is very similar to a model produced by Tile King. Ajax has decided to charge the same price as ...

Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

View More Free Quizzes
Related BrainMass Solutions

  • Monopolistically competitive

    Price = $5 an item Average Cost of Dry Cleaning = $2 Margin = 5 - 2 = $3 per item So the net profits per week will be 1000 X 3 = $3,000 As the new firm enters, the demand for existing firm will reduce with its marginal revenue.

  • Comparing Supply-Demand Equilibrium: Competition vs Monopoly

    Quantity Total Cost 0 100 10 220 15 300 20 360 25 450 30 600 35 770 40 960 What is the marginal cost and average total cost for the firm at each level of output?

  • Output level (Q ) / Price for Service

    She also estimated the marginal revenue equation for the company could be described by the equation below the demand equation. Lastly, since each additional room costs $10 to clean, she also derived a marginal cost equation.

  • Profit maximization where MR = MC

    78684 Calculating Output Level...demand...marginal revenue/cost 10. Cleaners R Us. offers professional motel room cleaning to motel owners in Danville, Illinois. The company estimates that each additional room it cleans costs the firm $10.

  • Calculating optimal output and price level

    She also estimated the marginal revenue equation for the company could be described by the equation below the demand equation. Lastly, since each additional room costs $10 to clean, she also derived a marginal cost equation.

  • Cost and Revenue Functions: Calculating Optimum Output and Price Level

    She also estimated the marginal revenue equation for the company could be described by the equation below the demand equation. Lastly, since each additional room costs $10 to clean, she also derived a marginal cost equation.

  • Market structures, externalities and profit maximizing

    How do you determine the profit maximizing level of production in terms of price, marginal revenue and marginal cost for the firm you are considering? f. Has the industry your workplace ever shifted market structures? Discuss.

  • Price competition

    Costs with five year warranty: Ajax: 60 + 20*5 = 160 Knockoff: 25+40*5=225 At this point, the cost for Knockoff exceed the maximum price customers would be willing to pay for a high quality camera.

  • Monopolies

    In a monopolistically competitive environment, as new companies enter, the demand for the products of the first firm will decline.

View More Related Solutions