Economics MBA profit maximisation toffee

In summary, the profit maximisation equilibrium output, price, and total profit for a monopolist is when output is at 50 + 22x and the price is at 220 - 4x.
  • #1
jackievdberg
3
0
[SOLVED] Economics MBA profit maximisation toffee

Hi Guys
I have a total blonde moment here :
The question goes :

I need to determine the profit maximising equilibrium output,price and total profit under 2 conditions
a) firm is monopolist b ) perfect competition ( I have the theory on these )

where a firm Produces output at cost of : C = 50 + 20 X
and sells at price P= 220 - 4 X

I started with X ( being any ) and made my colomns , now I am daft - I cannot get the Total cost , Average cost ext to get to the correct profits ?
Should I have used ( X ) as only 1 extra unit , 2 extra units ext or can I still do 10 units , 20 units?
I confused myself here totally.I would appreciate another few brains.
Thank You Thank You
Jackie
 
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  • #2
Profit is maximized when the cost to produce an extra unit is equal to the price it is sold at.
 
  • #3
You can go with 10, 20, but the answer won't be as accurate.

In Excel, just tabulate P and C for X = 1, ..., 55. (Do you see why you don't need to go over 55?)

For Monopoly, calculate profit as revenue - cost. I am assuming you can calculate a revenue from price (P) and quantity (X) at each level of X. Profit should be maximized when the change in revenue is equal to the change in cost for an extra unit. (That's CRGreathouse's intuition applied to a monopoly.)

For perfect competition, find the X at which price equals the additional cost of producing X units instead of X-1 units. Can you see what that additional cost is when you look at the formula for C?

For monopoly, the "exact" solution (in fractional units) necessitates use of calculus (derivatives).
 
Last edited:
  • #4
Thank you very much.It helped me tremendously. I could see where I went wrong.
I appreciate helpful people like you !
God bless.
 
  • #5
Hi

Can you please elaborate on the calculation for perfect competition. I still do not get the additional cost. Thank you so much.
 
  • #6
Just do the calculation. What is C when X = x? What is C when X = x+1?
 
  • #7
Thank you again,I managed.
I would need help later on with Quantitative methods.
Can I pose questions as I study the equations ?
My email is jackie@mso.co.za
Thanks for sharing your knowledge to help others !
Jackie
 
  • #8
jackievdberg said:
Thank you again,I managed.
I would need help later on with Quantitative methods.
Can I pose questions as I study the equations ?
My email is jackie@mso.co.za
Thanks for sharing your knowledge to help others !
Jackie
You may pose all "homework type" questions in forums "precalc math" or "calc & beyond" (as appropriate).

Any open-ended, discussion-type questions should be posed under the appropriate science forum.
 
  • #9
EnumaElish said:
Just do the calculation. What is C when X = x? What is C when X = x+1?

what isthe price andtoal profit of a monopolistwhen p=220-4x and cost =50+22x?
 

1. What is profit maximisation in an Economics MBA program?

Profit maximisation is a concept in business economics that refers to the process of increasing profits to the highest possible level. In an MBA program, students learn how to analyze and make strategic decisions that will result in the most profitable outcome for a company.

2. How does an Economics MBA program teach students about profit maximisation?

In an Economics MBA program, students learn about various economic theories and models that explain the factors that contribute to profit maximisation. They also learn how to use financial and economic data to make informed decisions that will lead to profit maximisation for a company.

3. What role does toffee play in profit maximisation in an Economics MBA program?

Toffee is used as an example or case study in many economics courses, including those in an MBA program. It serves as an example of a product that can be analyzed and optimized for profit maximisation, as it involves factors such as production costs, supply and demand, and pricing strategies.

4. How important is profit maximisation in an Economics MBA program?

Profit maximisation is a fundamental concept in economics and business, and it is essential for students in an MBA program to understand it. It is a key factor in making strategic decisions that can impact a company's success and financial stability.

5. Can profit maximisation be achieved without compromising ethical principles in an Economics MBA program?

Yes, profit maximisation can be achieved without compromising ethical principles in an Economics MBA program. In fact, many MBA programs focus on teaching students how to make ethical and socially responsible decisions while still achieving profit maximisation for a company. This includes considering factors such as environmental sustainability, corporate social responsibility, and fair labor practices.

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