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The document provides details for 3 economics problems assigned from the textbook. Problem 2-13 involves calculating maximum profit for a communication company given demand and cost functions. Problem 2-14 asks to determine optimal monthly sales and profit for a wood company given fixed and variable costs. Problem 2-15 involves finding the number of units a consumer product company should produce each month to maximize profit given a demand function and fixed and variable costs.

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130 views1 page

Assignment 1

The document provides details for 3 economics problems assigned from the textbook. Problem 2-13 involves calculating maximum profit for a communication company given demand and cost functions. Problem 2-14 asks to determine optimal monthly sales and profit for a wood company given fixed and variable costs. Problem 2-15 involves finding the number of units a consumer product company should produce each month to maximize profit given a demand function and fixed and variable costs.

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N.S
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BFT 214/3 Engineering Economics

Assignment -1

Do problems in the textbook (SWK); by hand and using Microsoft Excel.

Problem Nos. 2-13, 2-14, and 2-15.

2-13. A large company in the communication and publishing industry has


quantified the relationship between the price of one of its products and the
demand for this product as Price = 150 0.01 x Demand for an annual printing
of this particular product. The fixed costs per year (i.e. per printing) = RM50,000
and the variable cost per unit = RM40. What is the maximum profit that can be
achieved if the maximum expected demand is 6,000 units per year? What is
the unit price at this point of optimal demand?

2-14. A large wood products company is negotiating a contract to sell


plywood overseas. The fixed cost that can be allocated to the production of
plywood is RM800,000 per month. The variable cost per thousand board feet is
RM155.50. The price charged will be determined by p = RM600 (0.05)D per
1,000 board feet.

a) For this situation, determine the optimal monthly sales volume for this
product and calculate the profit (or loss) at the optimal volume.
b) What is the domain of profitable demand during a month?

2-15. A company produces and sells a consumer product and able to control
the demand for the product by varying the selling price. The approximate
relationship between price and demand is
2,700 5,000
= RM38+ , for > 1
2
where p is the price per unit in RM and D is the demand per month. The
company is seeking to maximize its profit. The fixed cost is RM1,000 per month
and the variable cost ( ) is RM40 per unit.

a) What is the number of units that should be produced and sold each
month to maximize profit?
b) Show that your answer in a) maximizes profit.

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