6. Exercise 10.8 The Poster Bed Company believes that its industry can best be classified as monopolistically competitive. An analysis of the demand for its
6. Exercise 10.8 The Poster Bed Company believes that its industry can best be classified as monopolistically competitive. An analysis of the demand for its canopy bed has resulted in the following estimated demand function for the bed: P = 1,265 9Q The cost analysis department has estimated the total cost function for the poster bed as TC = 9; 15Q2 + 5Q + 24,000 Short-run profits are maximized when the level of output is Z] and the price is . The total profit at this price-output level is . The point price elasticity of demand at the profit-maximizing level of output is V The level of fixed costs the firm is experiencing on its bed production is . Short-run prots are maximized when the level of output is The total profit at this price-output level is . The point price elasticity of demand at the profit-maximizing level of output is v and the price is . The level of fixed costs the firm is experiencing on its bed production is . What is the impact of a $5,000 increase in the level of fixed costs on the price charged, output produced, and profit generated? Increase No change Decrease Price Charged O O 0 Output Produced O O O Profits Generated O O O Continue without saving
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