Suppose the firm in Technical Problem 19 faces the following demand function: Q = 4,000 125P
Question:
Suppose the firm in Technical Problem 19 faces the following demand function:
Q = 4,000 − 125P
a. Write the equation for the inverse demand function.
b. Find the marginal revenue function.
c. How much output should the manager produce to maximize profit? What price should be charged for the output?
d. How should the manager allocate production between plants A and B?
Now suppose demand decreases to Q = 800 − 80P.
e. How many units should the manager produce to maximize profit?
f. How should the manager allocate production between plants A and B?
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Related Book For
Managerial Economics Foundations of Business Analysis and Strategy
ISBN: 978-0078021909
12th edition
Authors: Christopher Thomas, S. Charles Maurice
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