profit maximizing decisions of a firm. Firm A makes and sells motorcycles. The total cost of each cycle is the sum of the costs of frames, assemble and engine. The form produces its own engines according to the cost equations: CE = 250,000 + 1000Q – 5Q2. The cost of frames and assemble is $2,000 per cycle. Monthly demand for cycles is given by the inverse demand equation P = 10,000 – 30Q. Now suppose the firm has the chance to buy and unlimited number of engines from another company at a price of $1,400 per engine. Will this option affect the number of cycles it plans to produce? Its price? Will the firm continue to produce engines itself? If so, how many?
profit maximizing decisions of a firm.Firm A makes and sells motorcycles. The total cost of each cycle is the sum of the costs offrames, assemble and engine. The form produces its own engines…
