A company produces and sells hair dryers in a market where price (p) and demand (D) are related as follows: p = $35 + (3,000)/D – (4,800)/D² %3D The fixed cost (C;) is $800 per month and the variable cost per hair dryer (c,) is $38. a) How many hair dryers should be produced each month to maximize profits? b) How much is the maximum profit each month?
A company produces and sells hair dryers in a market where price (p) and demand (D) are related as follows: p = $35 + (3,000)/D – (4,800)/D² %3D The fixed cost (C;) is $800 per month and the variable cost per hair dryer (c,) is $38. a) How many hair dryers should be produced each month to maximize profits? b) How much is the maximum profit each month?
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
Chapter3: Benefits, Costs, And Decisions
Section: Chapter Questions
Problem 7MC
Related questions
Question
100%
Transcribed Image Text:A company produces and sells hair dryers in a
market where price (p) and demand (D) are
related as follows:
p = $35 + (3,000)/D – (4,800)/D²
%3D
The fixed cost (C;) is $800 per month and the
variable cost per hair dryer (c,) is $38.
a) How many hair dryers should be produced
each month to maximize profits?
b) How much is the maximum profit each
month?
Expert Solution
Step 1
Given
The demand curve facing the company:
........... (1)
Fixed cost FC = $800 and VC =38 per hair dryer.
Cost function: TC = 800+38Q
Q is the number of hairdryers.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
