Exercises

1. Given the cost function

C  Q   Q 3  6Q 3  13Q  15 ,

Find the minimum marginal cost.

2. If a total cost function is

C  Q   0, 0001Q3  12Q  100

a. Is the marginal cost increasing, decreasing, or not changing at Q  100 ?

b. Find the minimum marginal cost

3. The revenue function for a one-product firm is

1600
R  Q   200  Q .
Q 8

Find the value of Q that results in maximum revenue.

4. The revenue function for a particular product is R  Q   Q  4  0, 0001Q  . Find the largest

possible revenue.

5. A one-product firm estimates that its daily, total cost function (in suitable units) is

C  Q   Q 3  6Q 2  13Q  15

and its total revenue function is R  Q   28Q . Find the value of Q that maximizes the daily

profit.

6. A small tie shop sells ties for $3.50 each. The daily cost function is estimated to be C  x 

dollars, where x is the number of ties sold on typical day and

C  x   0, 0006 x3  0, 03 x 2  2 x  20

Find the value of x that will maximize the store’s daily profit.
7. The demand equation for a certain commodity is

1 2
P Q  10Q  300 ,
12

0  Q  60 . Find the value of Q and the corresponding price Q that maximize the revenue.

8. The demand equation for a product is

P  2  0, 001Q .

Find the value of Q and correspoding price P that maximize the revenue.

9. Some years ago it was estimated that the demand for steel approximately satisfied the
equation p  256  50 x , and the total cost of producing x units of steel was

C  x   182  56 x . (the quantity x was meansured in millions of tons and the price and total

cost measured in millions of dollars.) Determine the level of production and the
corresponding price that maximize the profit.

10. Consider a rectangle in the xy-plane, with corners at  0, 0  ,  a, 0  ,  0,b  and  a, b  . If

 a, b  lies on the graph of the equation y  30  x , find a and b such that the area of the

rectangle is maximized. What economic interpretation can be given to your answer if the
equation y  30  x represented a demand curve and y is the price corresponding to the
demand x ?

11. Until recently hamburges at the city sports arena cost 4$ each. The food concessionaire
sold an average of 10,000 hamburges on a game night. When the price was raised to $4, 40
, hamburge sales dropped off to an average of 8000 per night.

a. Assuming a linear demand curve, find the price of a hamburge that will maximize the
nightly hamburges revenue.

b. If the concessionaire has fixed costs of $1000 per night and the variable cost is $0.60
per hamburge, find the price of a hamburge that will maximize the nighly hamburge profit.
12. The average ticket price for a concert at the opera house was $50 . The average
attendance was 4000. When the ticket price was raised to $52 , attendance declined to an
average of 3800 persons per performance. What should the ticket price be to maximize the
revenue for the opera house? (Assume a linear demand curve.)

13. An artist is planning to sell signed prints of her lastest work. If 50 prints are offered for
sale, she can charge $400 each. However, if she makes more by 50 prints, she must lower
the price of all the prints by $5 for each print in excess of the 50. How many prints should
the artist make to maximize her revenue?

14. A swimming club offers memberships at the rate of $200 , provided that a minimum of
100 people join. For each member in excess of 100, the membership fee will reduced $1
per person (for each member). At most, 160 memberships will be sold. How many
memberships should be the club try to sell to maximize its revenue?

15. In the planning of a side walk café, it is estimated that for 12 tables, the daily profit will
be $10 per table. Because of overcrowding, for each additional table the profit per table
(for every table is café) will be reduced by $0.50. How many tables should be provided to
maximize the profit from the café?

16. The demand equation for a company is P  200  3Q , and the cost function is

C  Q   75  80Q  Q 2 , 0  Q  40.

a. Determine the value of Q and the corresponding price that maximize the profit.

b. If the government imposes a tax on the company of $4 per unit quantity produced
determine the new price that maximizes the profit.

c. The government imposes a tax of T dollars per unit quantity produced (where 0 ≤ T ≤
120), so the new cost function is

C  Q   75   80  T  Q  Q 2 , 0  Q  40
Determine the new value of Q that maximizes the company’s profit as a function of T.
Assuming that the company cuts back production to this level, express the tax revenues
received by the government as a function of T. Finally, determine the value of T will
maximize the tax revenue received by the government.