University Mugs Inc. manufactures coffee mugs bearing the logos of professional football teams. Assume that the market for coffee mugs is perfectly competitive. The manager forecasts the wholesale price of coffee mugs next year to be $7.00. The firm's estimated marginal cost is $SMC = 12 - 0.005Q + 0.0000008Q^2$ where Q is the number of coffee mugs produced and sold each month. University Mugs Inc. will have a fixed cost of $2,000 per month. At the profit-maximizing level of output total revenue will be
Added by Megan B.
Close
Step 1
The price is given as $7.00. Therefore, we set the marginal cost equation equal to 7: $7 = 12 - 0.005Q + 0.0000008Q^2$ Show more…
Show all steps
Your feedback will help us improve your experience
Andrew Davis and 88 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
My Joe is a producer of coffee mugs. Its marginal costs are below. Suppose that the market price of coffee mugs is $9.50. What is My Joe's profit-maximizing quantity?
Andrew D.
Coffee mugs can be manufactured for 60 cents each. At a price of $1 each, 1000 mugs can be sold. For each penny the price is reduced, 50 more mugs can be sold. What price will maximize the profit?
Audrey F.
Mo owns a Coffee truck which operates in a perfectly competitive industry. He faces the following cost schedule per day (notice that his coffee maker makes ten cups at a time, and that he has a daily fixed cost of operating the truck). The market price of a cup of coffee is $2.00. Suppose that Mo produces at the profit maximizing/loss minimizing level Q*. How much profit/loss does he earn? Q TC 0 $30 10 $50 20 $63 30 $73 40 $78 50 $95 60 $120
Manasvee S.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD