1.(20 total points) Suppose the demand for a product is given by Q_D= 100 - (1/2)P.

a)(10 points) Calculate the Price Elasticity of Demand when the price is $50.

b) (5 points) What price should the firm charge if it wants to maximize its revenue?

c) (5 points) Over what price range is demand elastic?

4. (20 total points) Suppose in the short run a perfectly competitive firm has variable cost = 3q^2 and MC = 6q where q is the quantity of output produced. Also, the firm has fixed cost F = 10,000.

a) (8 points) If the market price of the product is 360, how much output should the firm produce in order to maximize profit?

b) (6 points) How much profit will this firm make?

c) (6 points) Given your answer to b), what will happen to the market price as we move from the short run to the long run?