The sales of Pelton increased exponentially during the COVID Crisis Pelton competes with other similar brands and can be classified operating under the conditions of monopolistic competition An economist estimates the demand function as P 1250 15Q, where P is in dollars and Q is in number of Treadmills sold per week She also estimates the weekly expenses vary with output according to the following cost equation TC 10,000 25Q 7 5Q 2 1 3 Q 3 Based on these equations Determine the firm's short run profit maximizing price and output rate What are the firm's fixed and variable cost What are the firm's total revenues and total costs Is this firm making an economic profit, economic loss or a normal profit Suppose intense competition brings down prices and revenues Calculate at what prices will the firm for each of the following cases a) Make a normal profit b)Incurs a loss but should continue to produce in the short run and c)Incurs a loss but should shut down It has been reported that in Post COVID period, the market for Treadmills has decreased What strategies can the Peloton company take besides lowering the price to increase sales as well as profits Offer at least three specific strategies and explain how these can be cost effective and result in higher profits

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 03, 2024

The sales of Pelton increased exponentially during the COVID Crisis. Pelton competes with other similar brands and can be classified operating under the conditions of

The sales of Pelton increased exponentially during the COVID Crisis. Pelton competes with other similar brands and can be classified operating under the conditions of monopolistic competition.

An economist estimates the demand function as P = 1250 -15Q, where P is in dollars and Q is in number of Treadmills sold per week. She also estimates the weekly expenses vary with output according to the following cost equation:

TC = 10,000 + 25Q - 7.5Q² + 1/3 Q³.

Based on these equations:

Determine the firm's short-run profit-maximizing price and output rate.
What are the firm's fixed and variable cost? What are the firm's total revenues and total costs Is this firm making an economic profit, economic loss or a normal profit?
Suppose intense competition brings down prices and revenues. Calculate at what prices will the firm for each of the following cases: a) Make a normal profit? b)Incurs a loss but should continue to produce in the short-run? and c)Incurs a loss but should shut down?
It has been reported that in Post-COVID period, the market for Treadmills has decreased. What strategies can the Peloton company take besides lowering the price to increase sales as well as profits? Offer at least three specific strategies and explain how these can be cost-effective and result in higher profits.