Profit-Maximizing Level for Mini-Z

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Presentation transcript:

Profit-Maximizing Level for Mini-Z Question 2

Overview Discussion of Profit-Maximizing Level Show Calculations Narrative Conclusion Discussion of Profit-Maximizing Level Show Calculations Narrative Conclusion

Discussion of Profit-Maximizing Level Question 2: At the profit-maximizing level, what is the relationship between marginal cost, marginal revenue, price, and average cost for firms in competitive and oligopolistic industries? The CFO has provided the following information to you: fixed costs for the MiniZ are $2.75 million variable cost per unit is $200 She wants you to analyze the fixed and variable costs, optimal level of production, and profit for the MiniZ component. Question 2: At the profit-maximizing level, what is the relationship between marginal cost, marginal revenue, price, and average cost for firms in competitive and oligopolistic industries? The CFO has provided the following information to you: fixed costs for the MiniZ are $2.75 million variable cost per unit is $200 She wants you to analyze the fixed and variable costs, optimal level of production, and profit for the MiniZ component.

Calculations Profit-maximizing level, relationship = marginal cost, marginal revenue, price, and average cost? Fixed Costs for Mini-Z $2,700,000.00 Variable Cost Per Unit $200.00 Calculations Below: Analyze the fixed and variable costs $2,700,000.00 divided by $200.00 equals $13,500.00 Average Variable cost equals $13,500.00 Optimal Level of Production is $13,500.00 times two $27,000.00 Profit for the Mini-Z component (Cost-Profit-Volume) Analysis $2,700,000.00 times $200.00 $540,000,000.00

Narrative The profit-maximizing level for the Mini-Z component can be equated to a game of Monopoly where this business is trying to win the game against its competitors in this market. Marginal revenue must equal the marginal cost and this is how Mini-Z will be able to determine the maximum output level of production in order to receive the maximum profit margin. The profit-maximizing level for the Mini-Z component can be equated to a game of Monopoly where this business is trying to win the game against its competitors in this market. Marginal revenue must equal the marginal cost and this is how Mini-Z will be able to determine the maximum output level of production in order to receive the maximum profit margin.

Conclusion This presentation has discussed the profit-maximizing levels for the Mini-Z component. This presentation has discussed the profit-maximizing levels for the Mini-Z component.