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Suppose that the demand and supply functions for good x are given as follows: Q. =120 -2P, + I + P. and Of = -30
Suppose that the demand and supply functions for good x are given as follows: Q. =120 -2P, + I + P. and Of = -30 + P. -2t +s -2f where P. denotes the price of good x, P, denotes the price of a related product y, I denotes income, t denotes tax firms face, s denotes subsidy and f denotes factor prices. Suppose also that exogenous variables are given as follows: Income (I) - 450, Price of the related product (Py ) = 30, tax (t) -24, subsidy (s)-15 and factor prices (f)-36. What is the optimal pricing strategy of the firm at the equilibrium price in order to maximize revenue? lower price since demand is inelastic raise price since demand is inelastic raise price since demand is elastic lower price since demand is elastic
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