Find what price should terry charge to maximize profit

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Reference no: EM13236915

The demand curve for haircuts at Terry Bernard's Hair Design is, P = 22 - 0.22Q, where Q is the number of cuts per week and P is the price of a haircut. Terry is considering raising her price above the current price of $9 (which also represents her fixed costs). She will offer as many haircuts at the current price as the market wants, with a maximum of 100 per week. Hint: if AVC is constant, AVC = MC.) a. Graph the Demand curve and the implied Supply curve (both curves must be exact). Label both the equilibrium at $9 and unit elastic point.

If the Supply curve instead represents Terry's marginal cost curve (MC), what price should she charge to maximize profit? What is the profit in dollar terms?

Reference no: EM13236915

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