2. Your rm produces two types of heaters in MA, one is a traditional model (T), the other is more energy efficient CE). The marginal
2. Your rm produces two types of heaters in MA, one is a traditional model (T), the other is more energy efficient CE). The marginal cost per heater is $80. The demand in MA for the E-model is Q; = 180 1.5PE (Note! This is an inverse demand model, what should you do?),| where PE denotes the E-model's price and Q5 denotes the sales for the E-model heaters. A. [0.4PT] What is the optimal quantity QE that can maximize your rm's revenue om the E-model? B. [0.3PT] What is the optimal quantity Q5 that can maximize your rm's prot om the E-model? C. [0.3PT] Given the optimal quantity 0,; you found in Question 2, what price should you set? D. [0.5PT] The traditional model is mainly shipped to other states, where the consumers have lower concerns regarding energy efficiency than MA consumers. The shipment cost per heater is $10 for the T-model. However, other states have their own heater producers, so the price elasticity of demand is large: Ep = 7 for your rm's T-model heaters. Derive the relationship between price and marginal cost with E1, in it and calculate the optimal price for the T-model out of state
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance