Week Two Applied Problems

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Applied Problems By: Amanda Beatty BUS 640: Managerial Economics Ruizhen Hardin April 16th, 2012 Chapter Three, Applied Problems 2 and 4 Applied Problem 2 MC = 40P MR = 1000-10P 40P= 1000-10P 50P = 1000 P=20 Applied Problems 4 a.) If you take 30 radios and times it by $25 it equals $750. If you take 20 radios and times it by $25 it equals $500. If you take 14 radios and times it by $25 it equals $350. If you take 8 radios and times it $25 it equals 200. If you take 6 radios and times it by $25 it equals $150. Since one guard gets paid $200 a week it would make sense to hire more than one guard especially since if they only hire one guard they will still lose $550 (750-200). If they hire two guards then they would only lose $50(500-400). They would only end up losing a hundred dollars a week instead of more because if they hired three guards they would end up losing $250 (600-350). So it seems it would make sense to hire two guards. b.) The most the company would be willing to pay the first guard is $400 because if they don’t hire a security guard at all then they will lose $1,250 (25*50) a week and if they hire one security guard then they would only end up losing $750 (25*30), which is a $500 dollar difference. So if they pay one guard $400 at the most then they will still have saved themselves a hundred dollars. c.) If you take 30 radios and times it by $50 it equals $1500. If you take 20 radios and times it by $50 it equals $1000. If you take 14 radios and times it by $50 it equals $700. If you take 8 radios and times it $50 it equals 400. If you take 6 radios and times it by $50 it equals $300. Since one guard gets paid $200 a week it would make sense to hire more than one guard especially since if they only hire one guard they will still lose $1300 (1500-200). If would also make since if they hire more than two guards because they would still

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