Explain what is the inverse demand function

Reference no: EM13201665

Ajax, Inc. is a monopolist. The estimated demand function for its product is

Qd = 120 - 0.8P + 12Y + 4A

Where Qd denotes quantity demanded, P denotes price, Y denotes personal income (in thousands of dollars), and A denotes advertising expenditures in hundreds of dollars.

Ajax's marginal cost function is given as

MC = 21 + 4Q

Assume Y equals 3 and A equals 3 and fixed costs equal $1000

a. What is the inverse demand function? (The equation demand equation in the form P = a - bQd)?
b. What is the profit maximizing price and quantity of output for Ajax, assuming it is an unregulated monopoly? What are its profits?
c. If fixed costs increase to $1200, what will happen to equilibrium price and quantity?

Reference no: EM13201665

Questions Cloud

How to minimize total cost which maximizes short-run profits : Jones Company operates within a monopolistically competitive industry. The estimated demand for its products is given by the following inverse demand function P = 1760 - 12Q It finance department has estimated its total cost function as

Find what are the dimensions of the screen : If the length is increased by 1 inch while the width remains teh same, the areas is increased by 12 square inches. What are the dimensions of the screen?

Conduct a comparative analysis of the firms : Identify two firms with similar problems but from different countries. Conduct a comparative analysis of the firms. Analyze political, social, ethical, and legal differences facing both organizations and determine the impact these differences have..

Evaluate the amount of work in joules required to empty : The trough is full of water (density (1000 kg/m^3) ). Find the amount of work in joules required to empty the trough by pumping the water over the top. (Note: Use (g=9.8 m/s^2) as the acceleration due to gravity.)?

Explain what is the inverse demand function : Ajax, Inc. is a monopolist. The estimated demand function for its product is Qd = 120 - 0.8P + 12Y + 4A Where Qd denotes quantity demanded, P denotes price, Y denotes personal income (in thousands of dollars), and A denotes advertising expenditures

Administrator and teacher interview : Why did you choose to go into education as a career? Would you recommend the education profession to others? Why or why not? Are there any other teachers in your family? If so, who?

Solve the equation to find the total monthly cost : The equation C=mx+b can be used to model the monthly cost, C, of a cell phone plan where b is the flat monthly cost, m represents the cost in dollars per minute and x is the number of minutes used in the month.

Under what conditions would use both types of tobacco : If you were a tobacco farmer and had two loads of tobacco that were of different qualities, which would you supply as money and which would you supply for smoking.

Update stock levels when the order is cancelled : Execute queries to confirm that the basket order status and product stock levels have been appropriately modified by the trigger - the trigger needs to fire when a new status record is added to the BB_BASKETSTATUS table and when the IDSTAGE col..

User Account

All Pages