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Economics

Q. "An auto-service establishment has approximated its monthly cost function as follows:

TC = 6000 + 10 Q where Q is number of cars it services each months and TC represents its total cost. Firm is targeting 35,000 net monthly profit servicing 2000 cars.

a. Illustrate what price should firm charge to realize targeted profit?

b. Illustrate what would be its (cost-based) mark-up ratio?

b. Now suppose a demand curve firm face is: Q = 3000 - 50 P. Is firm going to achieve its profit goal? Explain.

c. If your to answer to (b) is "no", illustrate what would be optimal mark-up ratio for this firm?"

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9306272

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