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# ECO404 Assignment No 1 Complete Solution Spring 2012

MR = MC = 240

Where as MR = MC = P / {1 + (1/E)}

P = MC / {1 + (1/E)}

P = 240 / {1+ (1/-2.5)}

P = 240 / {1+ (-0.4)}

P = 240/ 0.6

P = 400

The optimum level of price that should be set to get the maximum level of higher profit is

400.

TC   = 10 + 5Q + 15Q2

MC = dTC / dQ

MC = 5 + 30Q

240 = 5 + 30Q

Q = 7.83

Putting the value of Q in equation (2)

(A)

TC = 10 + 5Q + 15Q2

TC = Fix Cost + Variable Cost

VC = 5Q + 15Q2                 …………………… (2)

VC = 5(7.83) + 15(7.83) 2

VC = 958.78

Variable cost is 958.78

(B) Average Total Cost

ATC = TC / Q

ATC = 10 / 7.83 + 5(7.83) / 7.83 + 15(7.83)2 / 7.83

ATC = 1.28 + 5 + 117.45

ATC = 123.73

(C) Average Variable Cost (AVC)

AVC = VC / Q

AVC = 958.78 / 7.83

AVC = 122.45

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ECO404+Assignment#1+Complete+Solutoin+Spring+2012

Attachments:

MR = MC = 240

Where as MR = MC = P / {1 + (1/E)}

P = MC / {1 + (1/E)}

P = 240 / {1+ (1/-2.5)}

P = 240 / {1+ (-0.4)}

P = 240/ 0.6

P = 400

The optimum level of price that should be set to get the maximum level of higher profit is

400.

TC   = 10 + 5Q + 15Q2

MC = dTC / dQ

MC = 5 + 30Q

240 = 5 + 30Q

Q = 7.83

Putting the value of Q in equation (2)

(A)

TC = 10 + 5Q + 15Q2

TC = Fix Cost + Variable Cost

VC = 5Q + 15Q2                 …………………… (2)

VC = 5(7.83) + 15(7.83) 2

VC = 958.78

Variable cost is 958.78

(B) Average Total Cost

ATC = TC / Q

ATC = 10 / 7.83 + 5(7.83) / 7.83 + 15(7.83)2 / 7.83

ATC = 1.28 + 5 + 117.45

ATC = 123.73

(C) Average Variable Cost (AVC)

AVC = VC / Q

AVC = 958.78 / 7.83

AVC = 122.45

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see the attached file.

Attachments:

Student ID: mc110202009

MBA

Assignment No.1

Managerial Economics

Course Code: Eco404

________________________________________________________________________

MR = MC = 240

Where as MR = MC = P / {1 + (1/E)}

P = MC / {1 + (1/E)}

P = 240 / {1+ (1/-2.5)}

P = 240 / {1+ (-0.4)}

P = 240/ 0.6

P = 400

The optimum level of price that should be set to get the maximum level of higher profit is

400.

TC   = 10 + 5Q + 15Q2

MC = dTC / dQ

MC = 5 + 30Q

240 = 5 + 30Q

Q = 7.83

Putting the value of Q in equation (2)

(A)

TC = 10 + 5Q + 15Q2

TC = Fix Cost + Variable Cost

VC = 5Q + 15Q2                 …………………… (2)

VC = 5(7.83) + 15(7.83) 2

VC = 958.78

Variable cost is 958.78

(B) Average Total Cost

ATC = TC / Q

ATC = 10 / 7.83 + 5(7.83) / 7.83 + 15(7.83)2 / 7.83

ATC = 1.28 + 5 + 117.45

ATC = 123.73

(C) Average Variable Cost (AVC)

AVC = VC / Q

AVC = 958.78 / 7.83

AVC = 122.45

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