We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

The Mechanics of Profit Maximization - Essay Example

Comments (0) Cite this document
Summary
The Mechanics of Profit Maximization First name, last name Name of school Abstract There are monopolistic and oligopolistic competitions. There are differences between these two competitions in the way they make decisions including pricing and item quantities…
Download full paper
GRAB THE BEST PAPER
The Mechanics of Profit Maximization
Read TextPreview

Extract of sample
The Mechanics of Profit Maximization

Download file to see previous pages... Marginal Revenue Q = 100 – 0.5P 0.5P = 100 – Q P = (100/0.5) – (Q/0.5) P = 200 – 0.5Q TR = P*Q = (200 - 0.5Q) Q TR = 200Q - 0.5Q^2 MR = dTR/dQ = 200 – Q Marginal Cost TC = 100 + 60 (Q) + (Q) 2 AC = TC/Q = 100/Q + 60 + Q MC = dTC/Dq = 60 + 2Q B) Demonstrate that profit is maximized at the quantity where MR = MC. MR = MC MR = dTR/dQ = 200 – Q MC = dTC/Dq = 60 + 2Q 200 – Q = 60 + 2Q 140 = 3Q Q = 46.67 C) Derive the relationship between marginal revenue and the price elasticity of demand, and show that the profit-maximizing price and quantity will never be the unit-elastic point on the demand curve. The relationship between marginal revenue and the price elasticity of demand can be summed as the percentage change in revenue equaling total percentage changes in quantity and price. R = PQ dR = PdQ + QdP dR/R = PdQ/PQ + QdP/PQ dR/R =dQ/Q + dP/p D) Using the information in (B), demonstrate that the profit-maximizing price and quantity will never be in the inelastic portion of the demand curve. ...
8) Explain the difference between firms in monopolistic competition and firms in oligopoly. What does this difference mean for prices and quantities and for economic profit? Firms in monopolistic competition contain large number of small firms, while in an oligopoly contain a small number of large firms (Amosweb, 2013). Also, monopolistic firms are price takers, while oligopolistic firms are price setters. Since oligopolies set the prices of quantities rather than take the prices, they can affect the outcome of the economic profit, where if they set the price high, they earn more profit. The monopolistic firms cannot afford to set the prices high because they cannot compete with oligopoly firms in terms of setting prices (Varun, 2013). With the small number of large firms in oligopoly, it is easier for one firm’s action to influence the action of other firms (Brunelle, 2006). For instance, if one oligopoly firm reduces its price because of increased quantities it will affect the entire market because it would imply other monopolistic firms would have to reduce their prices and may reduce their profit. 9) A firm has estimated the following demand function for it products: Q = 8 – 2P + 0.10I + A Where Q is quantity demanded per month in thousands, P is product price, I is an index of consumer income, and A is advertising expenditures per month thousands. Assume that P = $10, I = 100, and A = $20. Based on this information, calculate values for: Quantity Demand Q = 8 – 2P + 0.10I + A Q = 8 – 2 (10) + 0.10(100) + 20 Q = 18 Price Elasticity of Demand ed = dQ/dA ed = 1 Advertising Elasticity ae = dQ/dA x A/Q ae = (1) x (20/18) ae = 1.11 % meaning 1 percent ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The Mechanics of Profit Maximization Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1485044-the-mechanics-of-profit-maximization
(The Mechanics of Profit Maximization Essay Example | Topics and Well Written Essays - 750 Words)
https://studentshare.org/macro-microeconomics/1485044-the-mechanics-of-profit-maximization.
“The Mechanics of Profit Maximization Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/macro-microeconomics/1485044-the-mechanics-of-profit-maximization.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Short-run profit maximization
The text “The Agency Problem” gives a great example of the agency problem by comparing it to the relationship between our country’s president and its citizens. In this case, the citizens are the principle and the president is the agent because the objectives and policies that the president pursues will ultimately effect the citizens of the country.
3 Pages(750 words)Assignment
Profit maximization questions x 2
Being an executive of a big corporation, I need to understand the fact that I have a responsibility to create value for share holders through profit maximization but at the same time not violate the human values and behavior that the society desires from us.
3 Pages(750 words)Essay
COST CONCEPTS AND PROFIT MAXIMIZATION/CELLUCLEAR WIRLESS GOES GLOBAL
Businesses are implementing complex strategies coupled with complex structures to provide them with the competitive edge they require in their activities. In the case of Celluclear Wireless there are quite a few elements that need to be considered while making decisions on the perfect mix of transactions that will enable them to earn the maximum profit.
4 Pages(1000 words)Essay
Profit Maximization - An Actual or Theoretical Objective
Numerous exchange transactions constitute business operations, whereby the value of a commodity is multiplied with each transaction till it reaches the consumer. The goods consumers buy are not in their raw form, instead these have been through numerous refining processes.
8 Pages(2000 words)Essay
Logistics
The success of a company is determined by its ability to roll out its products to the customers through push or pull mechanisms. The preliminary design of an effective supply chain is complex and requires an understanding of the market forces and policies that affect the free flow of goods.
8 Pages(2000 words)Research Paper
Profit Maximization College Essay
the organizational objective is achieved1. Organizations follow hierarchical systems; i.e. an inverted tree's format that defines the levels in an organization and they report heads or leaders of a group or department2. Following is an example of a hierarchical system is as follows:
6 Pages(1500 words)Essay
Profit Maximization
Though the public links corporate goals and values solely to profit maximisation, it is evident from company behaviours and undertakings that financial success and social considerations are not treated as a zero-sum game. Companies are increasingly attempting to establish explicit statements reflecting their goals to take responsibility of immediate and long-term social and environmental consequences of their decisions.
10 Pages(2500 words)Essay
Soil Mechanics
The amount of air and water within a sample of soil affects its behavior. The sizes and types of particles that constitute a particular soil affect its properties and thus its load-carrying ability and compressibility. However the soil we find is hardly perfect for any kind of construction before any steps are taken to harden the soil.
8 Pages(2000 words)Essay
Fluid Mechanics
of water, the rate of discharge for the pipe, in gallons per minute , is 2. A rectangular surface is placed In a vertical position in fresh water with its top and bottom edges horizontal, as indicated in
8 Pages(2000 words)Essay
Behavior Problems: The Relationship between children and teachers
The writer analyzes how national and local guidelines for safeguarding affect day to day work with children and young people. He uses appropriate strategies for encouraging and supporting young people to understand and respect other people. He describes different types of bullying and the potential effects on children and young people.
13 Pages(3250 words)Coursework
ETHICALITY & PROFIT MAXIMIZATION
In the process, ethicality becomes a concern in regard to all the stakeholders that influence business activities and operations in the business environment. While some observed behaviours in the business environment are not ethical, ethicality and profit
1 Pages(250 words)Essay
Let us find you another Essay on topic The Mechanics of Profit Maximization for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us