Question
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 Editor
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started