Suppose that managers at Honda are deciding how to price the new Honda Accord. The managers estimate that their total costsincrease by $20,000 for each car they produce. They also estimate the demand curve they face; it is described by the equation:Q = -0.4 P + 16,000,where Q represents the quantity of Honda Accords they will sell and P represents the price they charge in US dollars.We can re-write that demand curve as:P = 40,000 - 2.5 Q.Take every possibly quantity that the managers might choose betweenand 7,000 in units of 100. For each possible quantity,calculate the associated price the managers would need to charge, the revenue they would earn, and the total costs. You can thencalculate profits for each level of quantity. Highlight the cell that contains the highest value of profit.Finally, you can also approximate marginal revenue here as the change in total revenue after the next 100 cars are produced. At whatquantity does marginal revenue roughly equal marginal cost? Highlight that level of marginal revenue.1-Which price leads to the maximum profits?A) $40,000B) $26,000C) $30,000D) $39,0002- What are profits at a quantity of 4,300?a) $39,775,000b) $30,000,000c) $34,375,000d) $36,975,0003- At what quantity does approximate marginal revenue equal marginal cost?a) 5,000b) 5,900c) 6,400d) 4.000

The total revenue is the total receipts collected from selling the goods in the market.…

Answered: 1-Which price leads to the maximum…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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