Scribd
Upload
78 views

Managerial Economics Assignment 1: TR Q TR Q

This document contains two questions regarding managerial economics assignments for Presto Products Inc. and Desktop Publishing Software Inc. For Presto Products: 1) A table is to be created showing output, price, revenues, costs, and profits as output increases from 0 to 10,000. A graph is then to show the relationships between total revenue, total costs, and profits. The output level maximizing profits is to be identified. 2) The profit-maximizing and revenue-maximizing output levels are to be calculated analytically and compared. For Desktop Publishing Software: 1) The monthly quantity, price, and profit are to be calculated at the short-run revenue-maximizing output

Uploaded by

Fatima Khalid
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
78 views

Managerial Economics Assignment 1: TR Q TR Q

This document contains two questions regarding managerial economics assignments for Presto Products Inc. and Desktop Publishing Software Inc. For Presto Products: 1) A table is to be created showing output, price, revenues, costs, and profits as output increases from 0 to 10,000. A graph is then to show the relationships between total revenue, total costs, and profits. The output level maximizing profits is to be identified. 2) The profit-maximizing and revenue-maximizing output levels are to be calculated analytically and compared. For Desktop Publishing Software: 1) The monthly quantity, price, and profit are to be calculated at the short-run revenue-maximizing output

Uploaded by

Fatima Khalid
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

MBA- IBA PU

Course Instructor: Ms. Saira Majeed

MANAGERIAL ECONOMICS

ASSIGNMENT 1
Q#1) Presto products Incl. manufacturers small electrical appliances and has recently introduced an
innovative new dessert maker for frozen yogurt and tofu that has the clear potential to offset the weak
pricing and sluggish volume growth experienced during recent periods. Monthly demand and cost
relations for Presto’s frozen desert maker are as follows:

P=$60 - $0.005Q TC= $100000 +$5Q +$0.0005Q 2

∂TR ∂TR
MR= = $60 - $0.01Q MC = = $5 + $0.001Q
∂Q ∂Q

a) Set up a table or spreadsheet for Presto output (Q), price (P), total revenue (TR), marginal
revenue (MR), total cost (TC), marginal cost (MC), total profit (π) and marginal profit (Mπ).
Establish a range for Q from 0 to 10,000 in increments of 1000 (i.e. 0, 1000, 2000… 10,000).
A. Using the Presto table or spreadsheet, create a graph with TR, TC, and π as dependent variables,
and units of output (Q) as the independent variable. At what price/output combination is total
profit maximized? Why?
B. Determine these profit-maximizing and revenue-maximizing price/output combinations
analytically. In other words, use Presto’s profit and revenue equations to confirm your answers
to part b.
C. Compare the profit-maximizing and revenue-maximizing price/output combinations and discuss
any differences.

Q#2) Desktop Publishing Software Inc., develops and markets software packages for business
computers. Although sales have grown rapidly in recent years, the company’s management fears that a
recent onslaught of new competitors may severely retard future growth opportunities. Therefore, it
believes that the time has come “get big or get out.” The marketing and accounting departments have
provided management with the following monthly demand and cost information:

P=$1000 - $1Q TC= $50,000 +$100Q

∂TR ∂TR
MR= = $1000 - $2Q MC = = $100
∂Q ∂Q

A. Calculate monthly quantity, price and profit at the short-run revenue-maximizing output level.
B. Calculate these same values for the short-run profit maximizing level of output.

You might also like