Cruise Shoes has the capacity to produce up to x pairs of shoes weekly (s ee ch.

Question

Cruise Shoes has the capacity to produce up to x pairs of shoes weekly (see ch. 6 case). It currently produces women's shoes with a cost structure given by CW = a + bQW + d QW2 and faces a perfectly competitive market which prices women's shoes at $y per pair. Cruise retains you to advise it about adding a line of girls' shoes, production costs for which are given byCG = f + g QG + h QG2. Demand for these girls' shoes is estimated to be: QGd = k - lPG. a) Calculate Cruise's maximum profit when making both types of shoes, with its current capacity. b) What production capacity would maximize profits for Cruise Shoes?

4. MARGINAL VS. AVERAGE ANALYSIS IN PRODUCTION

The City of Lake Orion issues licenses to 20 individuals to fish in its two lakes.

The daily fish catch at Lakes 1 and 2 respectively are given as follows:

Lake 1:Q1 = 16L1- 0.4L12 and Lake 2: Q2 = 10L2 - 0.1L22,

where Q is the fish catch, and L is the number of fishermen, at a given lake.

a) Determine the total daily fish catch at the lakes

(i) if equal numbers of fishers fished in each of the two lakes.

(ii) if the 20 fishermen want to maximize their fish catch.

5. Store Location: the problem related to "adding a new franchise"

Explanation / Answer

Marginal analysis involves a cost-versus-benefits comparison of various business activities. In marginal analysis, the cost of an activity is measured against incremental changes in volume to determine how the overall change in cost will affect the bottom line of a business. Marginal analysis can show the cost of additional production by a business all the way up to the break-even point. This is generally the maximum cost that a business can sustain without losing money.

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