Tom, the only steel drum manufacturer in Narnia, can sell a single drum for $30. However, for every extra drum he wants to sell, he is forced to reduce the price (for all his customers) by $2. The total fixed costs in his workshop are $15, and the variable cost of the first drum produced is $25. For each extra drum thereafter, the cost drops by $5 up to, and including, the fifth drum. After that, the cost of each extra drum increases by $5. What is Tom's profit-maximizing output, price, and total profit or loss? Dutput: [ Price: $ Profit/loss: $
Tom, the only steel drum manufacturer in Narnia, can sell a single drum for $30. However, for every extra drum he wants to sell, he is forced to reduce the price (for all his customers) by $2. The total fixed costs in his workshop are $15, and the variable cost of the first drum produced is $25. For each extra drum thereafter, the cost drops by $5 up to, and including, the fifth drum. After that, the cost of each extra drum increases by $5. What is Tom's profit-maximizing output, price, and total profit or loss? Dutput: [ Price: $ Profit/loss: $
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
Problem 3MC
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