Q1) Exotic Metals, Inc., leading producer of beryllium, which is used in many electronic products. Estimates the demand schedule for its product which is given below:
Price ($/Pound)
|
Quantity (Pounds/Period)
|
$25
|
$0
|
$18
|
$1,000
|
$16
|
$2,000
|
$14
|
$3,000
|
$12
|
$4,000
|
$10
|
$5,000
|
$8
|
$6,000
|
$6
|
7000
|
$4
|
8000
|
$2
|
9000
|
Fixed costs of manufacturing beryllium are $14000 per pound. Firm's variable cost schedule is as follows:
Output (Pounds/Period)
|
Variable Cost (Per Pound)
|
$1,000
|
$0
|
$2,000
|
$10
|
$3,000
|
$7
|
$4,000
|
$6
|
$5,000
|
$5
|
$6,000
|
$5
|
$7,000
|
$5.14
|
$8,000
|
$5.88
|
$9,000
|
$7.00
|
a. Determine total revenue and marginal revenue schedules of the firm.
b. Find out average total cost and marginal cost schedules for the firm
c. What are Exotic Metals' profit-maximizing price and output levels for production and sale of beryllium?
d. What is Exotic Metals' profit (or loss) at solution determined in Part c.?
e. Assume that federal government announces it will sell beryllium, from its extensive wartime stockpile, to anyone who wishes it at $6 per pound. How does this affect solution determined in Part c.? What is Exotic Metals' profit (or loss) under these situations?