Managerial Economics

Portfolio Task Two 2015/16

You are required to write a report that addresses the following topic:

The table below provides data about Weyland Acoustics plc (a fictitious company) that produces headphones.

Quantity (units)	0	10	20	30	40	50	60	70	80
Total Cost (€)	1200	1800	2000	2100	2240	2600	3300	4210	5360
Price per unit (€)	0	160	148	136	127	116	107	95	83

 

Using the cost data derive the following: Total Fixed costs, Total Variable costs, Average Fixed costs, Average Variable costs, Average Total cost and Marginal costs.

Using the data on prices derive the following: Total revenue, Average revenue, and Marginal revenue.

Use your results to answer the following questions:

1. Assess whether these data relate to either the short-run or the long-run. [Approximately 200 words]
2. At which level of output (to the nearest 10 units) would the owners be maximising their profits? What is the value at which profits are maximised?
3. At which level of output (to the nearest 10 units) would the managers be maximising sales revenue? What is the value of the maximum sales revenue?
4. Explain why the managers of the company might focus on sales revenues rather than profits. [Approximately 800 words]
5. If the owners introduced a profit constraint of €3000, at which level of output (to the nearest 10 units) would the managers wish to operate based on achieving the highest possible sales revenue?

Word limit – 1800 words maximum

 

 

Assessment criteria

• Accuracy of the calculation of the required cost and revenue values
• Precision of identification of profit maximising and sales revenue maximising outputs
• Thoroughness of the discussion about the managers preference for sales revenue maximisation
• Structure and presentation of material, including the use of the Harvard Citation and Referencing system