(Answered) Firm a makes and sells motor cycles the total cost of each

Management Studies

Firm A makes and sells motor cycles. The total cost of each cycle is the sum of the costs of frames, assembly and engine. The firm produces its own engines according to the cost equation C_E = 250,000 + 1,000q +5q²

The cost of frames and assembly is $2,000 per cycle. Monthly demand for cycles is given by the inverse demand equation:

p = 10,000 - 30q

Calculate the MC of producing an additional engine. Calculate the MC of producing an additional cycle. Find the firm's profit maximizing quantity and price.

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