Determine the demand and revenue equations

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Reference no: EM131186953

In Exercise 6 if the government applies a luxury tax of 20% per coat, how are profits affected?

Exercise 6

A fur dealer finds that when coats sell for $4000, monthly sales are 6 coats. When the price increases to $5000, the demand is for 5 coats. Assume that the demand equation is linear.

(a) Find the demand and revenue equations.

(b) If overhead is $2500 per month and the production cost per coat is $2000, find the cost equation and profit equation.

Reference no: EM131186953

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