Evaluate the price elasticity of demand in each submarket

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An energy supply firm has the following deman curves for both domestic(m) and commercial(c) consumers of its product: Qm=40-5Pm, Qc=60-10Pc. The total cost function for the firm (C) is described by the following equation: C(Q)=120+0.025Q^2, Where Q=Qm+Qc

(a) Dertermine the profit maximizing level of output to be produced and sold in each submarket.

(b) What price should the firm charge in each submarket?

(c) Evaluate the price elasticity of deman in each submarket and briefly comment on their relevance in the determination of the relative pirces in both markets.

Reference no: EM13201216

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