## Revenue Would Be Maximized When Marginal Costs Equal Marginal Revenue..

“Maximizing Revenue” Please respond to the following: * From the scenario, assuming Katrina’s Candies is operating in the monopolistically competitive market structure and faces the following weekly demand and short-run cost functions: VC = 20Q+0.006665 Q2 with MC=20 + 0.01333Q and FC = \$5,000 P = 50-0.01Q and MR = 50-0.02Q *Where price is in \$ and Q is in kilograms. All answers should be rounded to the nearest whole number. Algebraically, determine what price Katrina’s Candies should charge if the company wants to maximize revenue in the short run. Determine the quantity that would be produced at this price and the maximum revenue possible Solution: 1) Revenue would be maximized when marginal costs equal marginal revenue. MC = MR 20 + 0.01333Q = 50 – 0.02Q 0.01333Q + 0.02Q = 50 – 20 0.03333Q = 30 Q = 30 / 0.03333 Q = 900 (rounded to the nearest whole number) Now, we have to substitute Q = 900 in the price equation: P = 50 – 0.01Q P = 50 – 0.01 (900) P = 50 – 9 P = \$41 Therefore, price to be charged in the short-run, P = \$41 Quantity that would be produced at this price, Q = 900 kilograms 2) Maximum revenue possible (maximum profit that is possible) = Total revenue – Total costs Total revenue = P * Q = (50 – 0.01Q) * Q 50Q – 0.01Q2 When Q = 900 Total revenue = 50 (900) – 0.01 (900)2 45,000 – 8,100 \$36,900 Total costs = Variable costs + Fixed costs 20Q+0.006665 Q2 + \$5,000 When Q = 900 Total costs = 20 (900) + 0.006665 (900)2 + 5,000 18,000 +5398.65 + 5000 \$28,398.65 Maximum Profit = Total revenue – Total costs [50Q – 0.01Q2] – [20Q+0.006665 Q2 + \$5,000] 30Q –...

## All Answers Should Be Rounded To The Nearest Whole Number.

From the scenario, assuming Katrina’s Candies is operating in the monopolistically competitive market structure and faces the following weekly demand and short-run cost functions: VC = 20Q+0.006665 Q2 with MC=20 + 0.01333Q and FC = \$5,000 P = 50-0.01Q and MR = 50-0.02Q *Where price is in \$ and Q is in kilograms. All answers should be rounded to the nearest whole number. Algebraically, determine what price Katrina’s Candies should charge in order for the company to maximize profit in the short run. Determine the quantity that would be produced at this price and the maximum profit possible. Answer: P = 50-0.01Q……..demand curve Profit is maximized at a point where MR = MC i.e. 50-0.02Q = 20 + 0.01333Q or 30 = 0.03333Q, implies profit maximizing quantity (Qm) = 30/0.03333 = 900 approx. And profit maximizing price (Pm) = 50-0.01*900 = \$41 [using demand curve] So maximum profit = total revenue – total cost = P*Q – FC – VC = 41*900 – 5000 – 20*900-0.006665*(900^2) = \$8501.35 All Answers Should Be Rounded To The Nearest Whole Number....

## The Classification Of The Accounts Depends On The Specific Purpose.

In general, account means the record of the payment transaction which takes place between a buyer and seller for a particular time period. The classification of the accounts depends on the specific purpose. But in general, there are two types of the accounts – personal and impersonal account. Personal accounts are related to any person or institution or any company account. It includes bank a/c and creditor a/c etc. Impersonal accounts are further two types – real accounts and nominal accounts. Real accounts are related to the assets which can be felt or touched like building account, machinery account, stock or furniture account etc. Nominal accounts are related to the income and expenses that includes salary, commission or rent etc. Debit and credit are two fundamental aspects of every accounts transaction and it helps in understanding the exact condition of the business through analyzing the accounts. For example – of the credit is increasing and debit is decreasing it means that company is earning revenues and if the debit is increasing and credit is decreasing it means that expenses is increasing in the company. The Classification Of The Accounts Depends On The Specific Purpose...