Question
SI is going to release an SI walkie talkie. Market research suggests that the demand curve for this new product will be Q = 1500-10p
SI is going to release an SI walkie talkie. Market research suggests that the demand curve for this new product will be Q = 1500-10p where p is the price. It will cost $1,000 to hire an SI student to design the product up front. This set up cost is necessary before any products can be made. In addition to the set up cost, there is a marginal cost of $60 per walkie talkie.
(a) What is the total revenue function R(Q)?
(b) What is the total cost function C(Q)?
(c) What is the marginal cost function MC(Q)?
(d) The marginal revenue function is MR(Q) = 150-2Q/10.What is the profit maximizing quantity of walkie talkies to sell for SI?
(e) What is the maximum profit that SI can make?
(f) What is 3rd degree price discrimination? Discuss how SI can implement third degree price discrimination in this market?
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