Suppose a firm faces the following demand for their product: P=100-Q. Further assume that the marginal cost to produce the product is $10 and that the fixed costs are $15. The firm is thinking of implementing the following pricing technique: sell as much as it can at a price of $40 then decrease the price to $25 and sell as much as it can.
How many units in total is it going to sell under this scheme?
How much profit is the firm going to make under this scheme?