Exotic Metals, Inc., a leading manufacturer of beryllium, which is used in many electronic products,...

Question

Exotic Metals, Inc., a leading manufacturer of beryllium, which is used in many electronic products, estimates the following demand schedule for its product:

Fixed costs of manufacturing beryllium are $14,000 per period. The firm’s variable cost schedule is as follows:

a. Find the total revenue and marginal revenue schedules for the firm.

b. Determine the average total cost and marginal cost schedules for the firm.

c. What are Exotic Metals’ profit-maximizing price and output levels for the production and sale of beryllium?

d. What is Exotic’s profit (or loss) at the solution determined in Part (c)?

e. Suppose that the federal government announces it will sell beryllium, from its extensive wartime stockpile, to anyone who wants it at $6 per pound. How does this affect the solution determined in Part (c)? What is Exotic Metals’ profit (or loss) under these conditions?

Robert · Accepted Answer

1
a) Total revenue and marginal revenue schedules for the firm  
Price 
($/Pound) 
Quantity Total Revenue Marginal Revenue
25 0 0 - 
18 1,000 18,000 18 
16 2,000 32,000 14 
14 3,000 42,000 10 
12 4,000 48,000 6 
10 5,000 50,000 2 
8 6,000 48,000 -2 
6 7,000 42,000 -6 
4 8,000 32,000 -10 
2 9,000 18,

Exotic Metals, Inc., a leading manufacturer of beryllium, which is used in many electronic products, estimates the following demand schedule for its product: Fixed costs of manufacturing beryllium are...

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