# GetMoney Inc Marginal Analysis Report

## Description

1) Marginal Analysis

You are the manager of GetMoney Inc. and you produce cardboard boxes.

Suppose that you hired a consultant for your company to estimate the demand for

your cardboard boxes. You collect data on the price and quantity of boxes sold and

send it to your consultant, who then estimates the inverse demand equation as P = 14

 (1.5)*Q. Please also assume that you have a fixed cost of \$2 and that the variable

cost as estimated by your consultant is V(Q) = 4Q + ?2.

a) What is the quantity that maximizes profits based upon the above information?

What are the corresponding maximum profits that you can earn? (Please use

b) At the quantity that maximizes net benefit, are marginal revenues positive,

negative, or zero? At this quantity, would you recommend increasing production

in order to increase revenues? Why or why not. (Please use graphs to support your

c) Are marginal benefits equal to zero at this quantity? Why or why not?

2

2) Supply and Demand/Demand Analysis

Suppose that your analyst estimates the demand equation for good X as given below:

???=12-??-2??+1??+?

Good X sells for \$1 per unit, good Y sells for \$2 per unit, good Z sells for \$1 per unit, and consumer income is \$4.