Price-output and profit contribution

Reference no: EM1368183

A product you produce has the following annual demand function:

P = 90 -0.003Q

The marginal cost of producing the product is $30. If the firm pays a fee of $50,000 to the General Drug Research Council, it can have its product's effectiveness certified. The demand function for a certified product is expected to be

P = 100 -0.003Q

a. Calculate the price, output, and profit contribution if the product is not certified.

b. Calculate the price, output, and profit contribution if the product is certified.

c. Should the firm undergo the certification process?

Reference no: EM1368183

Questions Cloud

Determine market structure for commercial aircrafts : Based on your reading, which market structure is more applicable for the market for building commercial aircrafts, when there are two major manufacturers of the commercial airplanes and little possibility of entry by new firms:

United state government response action : Write down the U.S. government response action (or phase) for the 2009-2010 seasons H1N1 outbreak? Was this the appropriate stage in your opinion? Explain Why or why not?

Cost analysis-estimation : Assume The Big Enchilada Restaraunt has been offered a 1 year binding lease agreement for $5200/mth on an attractive site. Before the lease is signed, what is the incremental cost per month?

Discussion on reducing protection : Describe some models that forecast the effect that reducing protection Tariffs will have on factor prices Labour and capital.

Price-output and profit contribution : Compute the price, output, and profit contribution if the product is not certified. Compute the price, output, and profit contribution if the product is certified. Should the firm undergo the certification process?

Effectiveness of aids vaccine : Describe the efficiency of AIDS vaccine. It must comprise information such as: the side effects of the vaccine, where do they use them the most

Question on market failure : In Florida, huge contraption turns and starts lumbering down next row of juice-laden Valencia oranges. The operator watches his progress on two TV screens in his cab,

Monopolists and free ridership : Explain the circumstances in which a monopolist may encounter a free rider problem and determine the senses in which a perfectly-discriminating monopolist is efficient or inefficient.

Ratio of marginal product : You were recently hired to replace the manager of the Roller Division at a major conveyor manufacturing firm, despite the manager's strong external sales record.

User Account

All Pages