Re: ::: vuaskari.com ::: 100% ECO401_IDEA SOLUTION BY BINISH AWAIS

in 4th case why MC value is 0.9, it is nor equal to MR that is MR= MC

On Wed, Jun 1, 2011 at 10:02 AM, █▓Binish_Awais█▓ <greyferry@gmail.com> wrote:

100% sure idea solution of ECO401

Composed and solved by BINISH

greyferry@gmail.com

don't copy plz

Part A: solution by Binish

Q

P

TFC

TVC

TR

MR

TC

MC

Profit (p)

400

2.5

150

750

1000

-

900

-

100

500

2.25

150

830

1125

1.25

980

0.8

145

600

2

150

905

1200

0.75

1055

0.75

145

700

1.75

150

995

1225

0.25

1145

0.9

80

Part B: solution by Binish

Optimal level of output =600

Optimal level of price =2

Where MR=MC =0.75

Detailed calculation of Part A:

For 1^st case

TR=P*Q

TR=1000

For 2^nd case

TR=P*Q

TR=1125

For 3^rd case

TR= P*Q

TR=1200

For 4^th case

TR=P*Q

TR=1225

Calculation for MR:

The first case will be blank coz we cant take delta for this case

So leave it blank :

For 2^nd case

MR= delta TR / delta Q

MR=1125-1000/500-400

MR=125/100

MR=1.25

For 3^rd case

MR=delta TR/delta Q

MR=1200-1125/600-500

MR=75/100

MR=0.75

For 4^th case

MR = delta TR /delta Q

MR = 1225-1200/700-600

MR=25/100

MR=0.25

Calculations for TC:

1^st case

TC=TFC+TVC

=150+750

=900

2^ND Case

TC=TFC +TVC

=150+830

=980

3^rd Case

TC=TFC+TVC

=150+905

=1055

4^th case

TC=TFC+TVC

=150+995

=1145

Profit calculations :

For 1^st case :

Profit = TR-TC

=1000-900

=100

For 2^nd case

Profit = TR-TC

=1125-1055

=145

For 3^rd case

Profit = TR=TC

=1200-1055

=145

For 4^th case

Profit = TR-TC

= 1225-1145

=80

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