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The Mineola Corporation hires a consultant to estimate the relationship between its profit and it output. The consultant reports that the relationship is

f = -10 - 6Q + 5.5Q2 - 2Q3 + 0.25Q4

a. The consultant says that the firm should set Q equal to 1 to maximize profit. Is it true that d?/dQ = 0 when Q - 1? Is ? at a maximum when Q = 1?

b. Mineola's executive vice president says that the firm's profit is a maximum when Q = 2. Is this true?

c. If you were the chief executive officer of the Mineola Corporation, would you accept the consultant's estimate of the relationship between profit and output as correct?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9476890

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