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The Zinger Company: Total Cost, Marginal Revenue and Price

Zinger Company makes and sells a sewing machine line. manufactures and sells a line of sewing machines. Demand (Q) is represented by the equation below:

Q = 400 - .5P

P = price.

The total cost of making Q units/period are represented by:

TC = 20,000 + 50Q + 3Q2.

What is the expression for total profits in terms of Q?

a. 20,000 - 750Q + 5Q2
b. -20,000 + 750Q - 5Q2
c. 800Q - 2Q2
d. 400Q - .5PQ

What is the marginal revenue function for Zinger Company?

a. 2Q2 - 800
b. 400 - 2Q2
c. 800 - 2Q
d. 800 - 4Q

What price will be charged?

a. $650/unit
b. $65/unit
c. $6500/unit
d. $6.50/unit

Solution Preview

1) Q = 400 - 0.5P, rearranging this equation in terms of Q we get

P = 800 - 2Q

Total revenue TR = P*Q
= 800Q - 2Q2

Total Profit = TR - TC
TC = 20,000 + 50Q + 3Q2

Total profit = 800Q - 2Q2 - 20000 - 50Q - 3Q2
= -20000 + 750Q - 5Q2

The answer is b.

2) Q = ...

Solution Summary

This solution provides calculations for total profits, marginal revenue function, and the price that will be charged. It contains simple calculations step-by-step.

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