I need help with the attached economics homework assignment. Would I be able to get answers by…


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I need help with the attached economics homework assignment. Would I be able to get answers by… 1 answer below » I need help with the attached economics homework assignment. Would I be able to get answers by Monday at noon EST? Document Preview: Cheri Hildreth
EMBA 605
Fall 2015
Homework Assignment #2
(10 pts.) RJ Corman Corp. commissions you to evaluate the economic viability of dinner trains in the central Kentucky region. Since they are the only company capable of setting up and running a dinner train operation, the market demand will be their demand. They have already conducted a demand study View complete question » I need help with the attached economics homework assignment. Would I be able to get answers by Monday at noon EST? Document Preview: Cheri Hildreth
EMBA 605
Fall 2015
Homework Assignment #2
(10 pts.) RJ Corman Corp. commissions you to evaluate the economic viability of dinner trains in the central Kentucky region. Since they are the only company capable of setting up and running a dinner train operation, the market demand will be their demand. They have already conducted a demand study and determined that nightly demand on Fridays and Saturdays is given by Q = 300 – 5P, where Q is the number of customers and P is the price of the dinner excursion package in dollars. They have also determined that their marginal costs are constant at $20 per customer (i.e. MC = AVC = $20), and that they incur fixed operational costs of $1000 (TFC = $1000) every time they crank up the locomotive and haul dining cars around the countryside for three or four hours. Is this a losing proposition, or can RJ Corman make an economic profit running a dinner train? Obviously you should evaluate the profit-maximizing output and price, and illustrate and explain what profits (or losses) will be earned.
Nightly demand on Fridays and Saturdays is determined by Q = 300 – 5P,
Q is the number of customers and P is the price of the dinner excursion package in $$
Marginal cost (MC) = $20 per customer
Total fixed costs (TFC)= $1000 for dining car transportation
5P= 300- Q
P= 60 – 0.2 Q
TR= 60Q – 0.2 Q
MR= 60- 0.4 Q
Profit maximizing price and output are found at the point where Marginal Revenue equals Marginal Cost
MR= MC
So : 60 – 0.4Q = 20
40= 0.4 Q
Q= 40/ 0.4 = 100
P= 60 – 0 .2 Q
P= 60 – 0.2×100
P= 40
The profit maximizing price (P) is $40 and the profit maximizing quantity or output (Q) is 100.
For RJ Corman’s dinner train operation:
Total Revenue (TR)= P x Q or TR= 40 x 100= 4,000
Total Cost (TC) = Total fixed cost (TFC) + Total variable cost (TVC)
TC= 1000 + 20 X 100 = 3,000
Profit = TR- TC or 4000 – 3000 = 1,000
RJ Corman is running his dinner train with a positive economic profit!
(5… Attachments: ECON-homework….docx View less » Nov 15 2015 05:15 AM

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