a. Market for Widgets: (Units Demanded) q = 1,000,000-100,000*p 2 Revenue = p*q Cost structure: Fixed Costs: = $400,000 Variable costs = $1*q Total Costs
a. Market for Widgets:
(Units Demanded) q = 1,000,000-100,000*p2
Revenue = p*q
Cost structure:
Fixed Costs: = $400,000
Variable costs = $1*q
Total Costs = $400,000+$1*q
What is the profit maximizing price in each case?
ROE Maximizing Price? (Automate if time or on your own)
ROE Maximizing Leverage?(Automate if time on your own)
What is "separable" in optimization?Can you pick price first?Leverage first?Why? This is actually pretty important and you should use your model until comfortable with the idea.
Step by Step Solution
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Step: 1
Lets break down the problem step by step Profit Maximizing Price To find the profitmaximizing price we need to maximize the profit function Profit Rev...
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Step: 2
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Authors: Eugene F. Brigham and Michael C. Ehrhardt
13th edition
1439078106, 111197375X, 9781439078105, 9781111973759, 978-1439078099
