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Economics

Suppose that you have estimated the following demand function for your firm.

Qd = 150,000 - 400P + 6M - 200Pr

where Qd is the amount sold, P is price, M is income, and Pr is the price of a related good. The estimated values for M and Pr in 2014 are $25,000 and $200, respectively. The AVC (Average Variable Cost) function has been estimated to be :

AVC = 300 - .012Q + .000003Q^2

Fixed forecast for 2016 : $400,000

What is the profit-maximizing level of production?

What is the profit-maximizing price at this output?

What is the own price elasticity of demand at this level of output? Is demand elastic or inelastic at this price and quantity?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91950590

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