Explore BrainMass
Share

Calculating profit maximizing supply level from a retailer

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

The Los Angeles retail market for unleaded gasoline is fiercely price competitive. Consider the situation faced by a typical gasoline retailer when the local market price for unleaded gasoline is $2.50 per gallon and total cost (TC) and marginal cost (MC) relations are:

TC = $156,250 + $2.25Q + $0.0000001Q2

MC = dTC/dQ = $2.25 + $0.0000002Q

and Q is gallons of gasoline. Total costs include a normal profit.

A. Using the firm's marginal cost curve, calculate the profit-maximizing long-run supply from a typical retailer
B. Calculate the average total cost curve for a typical gasoline retailer.

© BrainMass Inc. brainmass.com October 25, 2018, 4:00 am ad1c9bdddf
https://brainmass.com/economics/price-levels/calculating-profit-maximizing-supply-level-from-a-retailer-363076

Solution Preview

A. Using the firm's marginal cost curve, calculate the profit-maximizing long-run supply from a typical retailer

MC=2.25+0.0000002Q
Price=P=$2.50
For ...

Solution Summary

Solution describes the steps to calculate profit maximizing long run supply from a typical retailer. It also calculates total average cost at this level.

$2.19
See Also This Related BrainMass Solution

Microeconomics

A. Calculate the profit-maximizing activity level.
B. Calculate the company's optimal profit and return-on-sales levels.

A. When quantity is expressed as a function or price, what are the Florida demand and supply curves if p = $11, Ps = $5, Y = $12,000 billion, T = 75 degrees, and PI = $6, and PK = 12.5%.
B. Calculate the surplus or shortage of Florida orange juice when P = $5, $10, and $15.
C. Calculate the market equilibrium price-output combination.

A. Calculate the implied are income elasticity of demand.
B. Given the projected fall in income, the sales manager believes that current volume of 10,500 plants could only be maintained with a price cut or $5 per unit. On this basis, calculate the implied are price elasticity of demand.
C. Holding all else equal, would a further increase in price result in a higher or lower total revenue?

View Full Posting Details