Ralphs cost curve is piece-wise linear. For output of 0 q 1,000 units...
50.1K
Verified Solution
Link Copied!
Question
Accounting
Ralphs cost curve is piece-wise linear. For output of 0 q 1,000 units it is given by C(q;P) = 1,000 + 6q; for 1,000 q 2,000 it is given by C(q;P) = 3,000 + 4q; and for 2,000 q it is given by C(q;P) = 5,000 + 8q. Assume the selling price is 
= 7, with break-even being q=1000
(a) Now approximate Ralphs cost curve with an LLA of 3,000+4q; notice this approximation is consistent with the optimal output chosen above as well as the original break-even calculation. Suppose the selling price unexpectedly drops to 
= 4.8. Using the LLA of 3,000 + 4q, calculate Ralphs best choice of output (somewhere between shutdown and a maximum of 2,000 units). (b) What mistake has Ralph made in part (a) above?
I'm uncertain how to do these two tasks. Please help with a step-by-step solution for the above
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.