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3- Assume a firm has FC of $1,200,000 per year and a VC of $15 per unit. If the firm assumed a constant elasticity
3- Assume a firm has FC of $1,200,000 per year and a VC of $15 per unit. If the firm assumed a constant elasticity of demand equal to -1.86 and set an overall demand equal to 500,000 units per year if the product was priced at marginal cost. (6 points) (a) Calculate the optimal price to maximize the profit. (2marks) (b) Calculate the optimal quantity at the optimal price to maximize the profit. (2 marks) (c) Calculate the maximum profit the firm would achieve at optimal price and quantity. (2 marks)
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Managerial Economics A Problem Solving Approach
Authors: Luke M. Froeb, Brian T. McCann, Mikhael Shor, Michael R. War
3rd edition
2901133951482, 1133951481, 978-1133951483
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