Assignment 1

Question 1

To calculate the optimum production speed the following table was made:

Raw
Production Rejected Rejected Approved material Enviromental Wages Variable Average Marginal
Var.
speed % 15 300 machine Cost Cost Cost

100 0.50% 5 95 1500 1500 225 3225 33.95

-13.6364
125 2% 2.5 122.5 1875 750 225 2850 23.27
42.3913
150 3% 4.5 145.5 2250 1350 225 3825 26.29
50
175 4% 7 168 2625 2100 225 4950 29.46
356.25
200 10% 20 180 3000 6000 225 9225 51.25
575
225 16% 36 189 3375 10800 225 14400 76.19

MC AVC
100 0 33.95
125 -13.64 23.27
150 42.39 26.29
175 50.00 29.46
200 356.25 51.25
225 575.00 76.19

In order for the optimal cost production speed to be found the MC and AVC values should be the
same or close together. As it is shown they are not, but the closest they get is at production of
150 units.

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Assignment 2.

Question 1.

y Demand
200 MR
MC
MC
180

160

140

120

100

80

60

40

20

x
-2000 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 22000 24000 26000

-20

-40

Thus, the optimum point where the kinked MC curve crosses MR curve is 16300 units sold at a price of
85 DKK.

1
𝑝=− 𝑥 + 150
250

1
𝐶𝑀 = − 𝑥 + 150
175

MC: 0 – 10000 units  43 DKK

10000 – 20000 units  linear increase with 22 DKK per unit

AVC = 43 -> TVC = 16300 * 43 = 700900 DKK

Total revenue = 16300 * 85 = 1385500 DKK

CM = 1385500 – 700900 = 684600

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Assignment 3.

Question 1.

Peanut M1

4000 M2

3000

2000

1000

Useful
-500 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 6000 6500 7000 7500 8000 8500

-1000

-2000

-3000

-4000

As it is seen from the graph the optimum production point is 800 units of Useful and 1800 units
of Peanut. Therefore the prices will be:

1 1
𝑝 = − 250 𝑥 + 150 = − 250 ∗ 800 + 150 = −3.2 + 150 = 146.8 𝐷𝐾𝐾 for Useful

1 1
𝑝 = − 250 𝑥 + 150 = − 250 ∗ 1800 + 150 = −7.2 + 150 = 142.8 𝐷𝐾𝐾 for Peanut

CM for Useful = 146.8 * 800 = 117440

CM for Peanut = 142.8 * 1800 = 257040

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