Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The demand equation for ACME Whatsit's product is p=140-0.8q, and their cost function is c = 0.1q2 +14q + 810, where p = the price

The demand equation for ACME Whatsit's product is p=140-0.8q, and their cost function is c = 0.1q2 +14q + 810, where p = the price that ACME sets for its Whatsits. q=the weekly demand for ACME's product. c = the weekly cost of producing q Whatsits (output is assumed equal to demand). a. (6 pts) Find the price that ACME should set to maximize its weekly profit. What is the maximum weekly profit? b. (2 pts) The County imposes a $5.40 per unit production tax on ACME's product. Assuming that ACME acts to maximize their profit under this new tax, how much of the tax should they pass on to consumers as a price increase? For full credit-show your work. . . Show the steps you take to finding the profit maximizing price in part a. Explain how you know that this price maximizes the weekly profit. Show how you find the new profit maximizing price in b. HTML Editorimage text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Volume 1 Chapters 1 To 12

Authors: J. David Spiceland, James F. Sepe, Lawrence A. Tomassini, Mark W. Nelson

5th Edition

0073324655, 9780073324654

More Books

Students also viewed these Accounting questions