# Managerial Economics--PLZ HELP!

1. An auto-service establishment has estimated its monthly cost function as follows:
TC = 6400 + 8 Q
Where Q is the number of cars it services each months and TC represents its total cost.
The firm is targeting \$3,200 net monthly profit with an output target of servicing 3000 cars per month.
a. Determine the firm’s markup ratio and the price it would have to charge to make its targeted profit.
b. Now suppose the demand curve the firm faces is:
Q = 2760 – 50 P
Is the firm going to achieve its target profit? Explain.
c. If your answer to (b) is “no”, what price would you recommend that the firm charge? Explain.

a) Use algebra. expected TC=6400+8*3000 = 30400. Adding on targeted monthly profit, total revenue must be 30400+3200 = 33600. Ergo, price must be 33600/3000= 11.2

b) clearly no. even if it charged zero, it couldn't service 3000 cars. Plug in 11.2 into P, then calculate profit/loss.

c) always always, where marginal cost = marginal revenue. (Assume, for now, there are no long term consequences or moral issues from screwing the customer.) MC from your first statement is 8. Now to determine marginal revenue. 1st, using algebra, rewrite the demand equation to be in terms of P.
I get P=55.2-.02*Q.
Now then total revenue is P*Q = 55.2*Q + .02*Q^2. Take the first derivitive and marginal revenue becomes 55.2-.04*Q. Set this equal to 8 (MC) and solve for Q. Plug the value for Q into the rewritten demand equation to solve for P. (hint, for P I get \$31.60)

Lotsa luck.

I understand how you got the price and all but i don't get how you find the markup ratio or is that 11.2? Thanks for your help

Another question, for part C...would you put the new Q(1180) into the profit equation to get the suggested price. Say, 3200(target profit)=1180P-15840(6400+8*1180), which then the price would be 16.14??

Mark-up ratio, as I understand, is the difference between the selling price and the buying price, divided (usually) by the selling price. I believe, in your case, the markeup ratio would be (11.2-8.0)/11.2 = 28.6%

(While I understand the economics of your question, the nomenclature of accounts and managers has frequently escaped me.)

No. I would put Q(1180) into the demand equation P=55.2 - .02Q Here P=31.6. Thus, total revenue would be 31.6*1180 = 37288. Total costs are 6400 + 8*(1180) = 15840. Monthly profits become \$21448.

But, as I hinted in my "nomenclature" note in my last post, economists do not think of problems in terms of "targeted profits" We always try to find the "maximum profits" solution. To me, "targeted profits" is a completely foreign concept.

Thank you for your help with this problem...i understand things alot better now.....the only other thing is my prior post i asked about the markup ratio? Is it the same as the price?

In a prior post .. Markup ratio is (price - cost)/price

I need help with understanding this problem scenario.Generalized Demand function Qd =1,800-20P+0.6M-50Pr. So
question A is looking at the function D2 income is \$19,500 and the price of related good is 250. Next, it wants you to sketch begining with D2 if there is a decrease in income causing comsumers to be willing and able to purchase 300 fewer units at each price. Find the new deman curve and label it D3, What is the equation fo D3, By how much must income fall to cause the shift from D2 to D3? Help

1. 👍 0
2. 👎 0
3. 👁 68

## Similar Questions

1. ### Economics

n auto-service establishment has estimated its monthly cost function as follows: TC = 6000 + 10 Q where Q is the number of cars it services each months and TC represents its total cost. The firm is targeting 35,000 net monthly

asked by Manny on December 9, 2012
2. ### Managerial Economics--REALLY NEED HELP BY TOMORROW

Auto Maintenance Services (AMS) is a small auto service outlet in a suburban area of Syracuse. In reaction to a small increase in wages that has caused the marginal cost of this auto service establishment to increase from \$25 to

asked by Heather on November 23, 2006
3. ### Managerial Economics

Auto Maintenance Services (AMS) is a small auto service outlet in a suburban area of Syracuse. In reaction to a small increase in wages that has caused the marginal cost of this auto service establishment to increase from \$25 to

asked by Heather on November 21, 2006
4. ### math

Rafi is upgrading his cell phone and monthly service plan.Triax Cell offers a new phone for \$50 and unlimited service for a monthly fee of \$40.CellUR offers a new phone and unlimited service for a monthly fee of \$50. After how

asked by Priyanka on February 18, 2015
5. ### Math

Rafi is upgrading his cell phone and monthly service plan. Triax Cell offers a new phone for \$50 and unlimited service for a monthly fee of \$40. CellUR offers a new phone and unlimited service for a monthly fee of \$50. After how

asked by darthv on February 22, 2015
6. ### Managerial Economics

Everkleen Pool Services (EPS) provides weekly swimming pool maintenance in Jeddah. Dozens of firms provide this service. The service is standardized; each company cleans the pool and maintains the proper levels of chemicals in the

asked by Mo on September 6, 2007
7. ### Managerial Economics

Everkleen Pool Services (EPS) provides weekly swimming pool maintenance in Jeddah. Dozens of firms provide this service. The service is standardized; each company cleans the pool and maintains the proper levels of chemicals in the

asked by Mo on September 6, 2007
8. ### economics

Ever Kleen Pool Services provides weekly swimming pool maintenance in Atlanta.  Dozens of firms provide this service.  The service is standardized;each company cleans the pool and maintains the proper levels of chemicals in

asked by Anonymous on August 8, 2010
9. ### College Algebra

A phone company has a monthly data plan where a customer pays flat monthly fee of \$30 and then a certain amount of money per gigabyte (GB) of data used on the phone. If a customer uses 3 GB, the monthly cost will be \$42. If the

asked by Keonn'a on September 10, 2017
10. ### Algebra

A phone company has a monthly data plan where a customer pays flat monthly fee of \$20 and then a certain amount of money per gigabyte (GB) of data used on the phone. If a customer uses 3 GB, the monthly cost will be \$26. If the

asked by Laisha on October 12, 2018

More Similar Questions