Suppose the yearly demand function of a certain firm is Q = 240 - 0.4P. The total cost function for the firm is TC = 5Q 2 + 5,000.

Choose a price between $500 and $600. Calculate annual revenue, cost and profit for this company at your chosen price.

What is the maximum annual revenue this company can obtain in a given year?

What is the maximum profit this company can obtain in a given year?

In which setting (part (b) or part (c)) are customers more responsive to changes in price? Justify your answer