The Zinger Company Manufactures and Sells a Line of Sewing $( \pi )$

question 13

Essay

The Zinger Company manufactures and sells a line of sewing machines.Demand per period (Q)for a particular model is given by the following relationship:
Q = 400 ? .5P
where P is price.Total costs (including a "normal" return to the owners)of producing Q units per period are:
TC = 20,000 + 50Q + 3Q² (a) Express total profits $( \pi )$ in terms of $Q$ .
(b) At what level of output are total profits maximized? What price will be charged? What are total profits at this output level?
(c) What model of market pricing has been assumed in this problem? Justify your answer.

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Definitions:

After-Tax Salvage Value

The net value of a disposed asset after accounting for any taxes incurred or savings on the salvage.

Financing Costs

Expenses incurred by a company in the process of raising funds, including interest payments, issuance costs of securities, and other related expenses.

Incremental Cash Flows

The additional cash flows from undertaking a project or investment.