SUBMIT FROM : MUHAMMAD NEHAL

CLASS : BS

SEMESTER : 2nd.

SUBJECT : ECONOMICS

ASSIGNMENT NO : 01

DATE OF SUBMISSION : 19 JANUARY, 2020

ASSIGNMENT:
Apple is an American international Tech brand that designs, manufactures, and deals in
hardware devices and software. It includes number of hardware products like iPad tablet
computer, smart speaker, the Apple Watch but iPhone Smartphone is highly demanded product
around the globe. Apple has autonomy in production and price setting of its products. Apple is
famous for its scope of variety in quality products and earning high revenues. Suppose total
revenue (TR) and total cost (TC) functions of Apple are following.

REQUIREMENT: 01
Calculate profit maximizing output level of Apple using marginal revenue (MR) and marginal
cost (MC) approach.

ANS:
As MC is equal to MR
MC = MR
So, first we take derivation of TC:
dTC/dQ = 100Q - 1.5Q2
dTC/dQ = 100 - 3Q

MC = 100 – 3Q
Now, we take derivation of TR:
dTR/dQ = 30 + 15Q
dTR/dQ = 15

MR = 15
MC = MR
100 – 3Q = 15
100 – 15 = 3Q
85 = 3Q
85/3 = Q

Q= 28.33
REQUIREMENT:02
Find out the amount of profit earned by Apple at profit maximizing level of output calculated in
part a.

ANS:
As, T = TR – TC
= 100Q – 1.5Q2 – (30 + 15Q)
= 100Q – 1.5Q2 – 30 - 15Q
= 85Q – 1.5Q2 -30
Putting the value of Q = 28.33
= 85(28.3) -1.5(28.3)2 – 30
=2405.5 – 1.5(800.89) – 30
=-1201.335 + 2405.5 – 30

= 1174.165

REQUIREMENT: 03
Find out average revenue (AR) function and slope of average revenue (AR) function.

ANS:
As: AR = TR/Q
TR = 100Q – 1.5Q2
TR is divided by Q
TR = 100Q/Q – 1.5Q2/Q
TR = 100 – 1.5Q
Putting Q = 28.33
TR = 100 – 1.5(28.33)
TR = 100 – 42.495
TR = 57.505
Slope of AR = dAR/dQ
= 100 – 1.5Q

= -1.5