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question 2)
1) Jewel co’s fixed costrs are stepped
2)increasing batch sizes from 1000 units to 2000 units would dramatically reduce setup costs and increase profitProduction—SP.p.u—-TSR–VC.p.u–TVC—————TFC———-TC———————–TP
1000————-20——20000—-10—-(10000)———-(10000)=====(20000)————-0
2000————-18—–36000—–8.80—(17600)———(10000)======(27600)—–8400
3000————16—–48000——7.80—(23400)———-(12000)======(35400)—–12600
4000————-13—-52000——6.40—-(25600)———-(12000)=====(37600)—–14400
5000————-12—-60000——6.40—-32000———–(14000)======(46000)——-14000
question 2
from 1000 to 2000 units Total marginal cost 10000-marginal cost 17600=7600 Marginal cost
dear tutor, does question two can be found by marginal cost method?
Why are you wasting your time copying out the examiners answer?
Yes, maximum profit is where the marginal revenue equals the marginal cost.
But why spend the extra time? There are only 6 marks available and you need to answer is the fastest way you can.
Dear Tutor, I wanted to show the following answer showing by calculation to illustrate whether i found it corectly or not. Sometimes a bigger picture helps for the detailed analysis. 2)increasing batch sizes from 1000 units to 2000 units would dramatically reduce setup costs and increase profit.
thank you very much
You are effectively expecting personal tuition. We do not provide that and do not have the time to provide it.
When going from 3,000 to 4,000 the marginal revenue is more than the marginal cost, and therefore will give higher profit.
When going from 4,000 to 5,000 the marginal revenue is less than the marginal cost, and so the profit then starts to fall.
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