Production Economics of Widgets A widget manufacturer sold 10,000 widgets for $250 each Total fixed
Production Economics of Widgets
A widget manufacturer sold 10,000 widgets for $250 each
Total fixed costs are $5,000 and variable costs per unit are $80
(a) Given this information, what is the total profit for
this production run?
(b) Marketing research indicated that the price elasticity
demand coefficient for the widgets is 25
(c) The factory wants to increase revenues and profits
(d) Find the quantity and price point which will maximize
profits
Use table provided to calculate new price points Add lines
as needed
To get started, what does a coefficient of 25 indicate? Is
the product price elastic or inelastic?
QTY Unit price Revenues Total fixed costs Total variable
cost Total cost Total profit
Current 10,000 $250 $5,000
New (1)
New (2)
New (3)
New (4)
