Homework 0 Questions Managerial Economics BA 445
Homework 0 Questions Managerial Economics BA 445
Homework 0 Questions Managerial Economics BA 445
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<strong>Homework</strong> 0 <strong>Questions</strong> <strong>Managerial</strong> <strong>Economics</strong> <strong>BA</strong> <strong>445</strong>Maximize ProfitSample Question: Find the quantity and price that maximize profit for afirm with demand Q = 100 – P (or inverse demand P = 100 – Q) and costfunction is C(Q) = 125 + 4Q 2Answer to Sample Question: Firm’s profit =Π = PQ – C = (100 – Q)Q – (125 + 4Q 2 ) = - 5 Q 2 + 100Q -125So take the first derivative and set it to zero,0 = Π = - 10Q + 100So Q = 10, and P = 100-10 = 90<strong>Homework</strong> Question 1: Find the quantity and price that maximize profitfor a firm with demand Q = 133.33 – (1/3)P and cost function is C(Q) =25000 + Q 2Answer to <strong>Homework</strong> Question 1:
<strong>Homework</strong> 0 <strong>Questions</strong> <strong>Managerial</strong> <strong>Economics</strong> <strong>BA</strong> <strong>445</strong>Solve EquationsSample Question: Find the quantities that solve the equations2Q 1 + Q 2 = 2Q 1 + 2Q 2 = 1Answer to Sample Question:Subtracting 2 times the second equation from the first equation yields,-3Q 2 = 0, or Q 2 = 0Plugging that into the first equation yields2Q 1 = 2, or Q 1 = 1If you have time to check your work, plug Q 1 = 1 and Q 2 = 0 into the originalequations2(1) + 0 = 21 + 2(0) = 1<strong>Homework</strong> Question 2: Find the quantities that solve the equationsQ 2 = 2 – .5Q 1Q 1 = 2 – .5Q 2Answer to <strong>Homework</strong> Question 2:
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