The firms marginal cost of production is constant

Assignment Help Business Economics

Reference no: EM13896713

The demand function for a firm’s product is Q = P^(-3). The firm’s marginal cost of production is constant at MC(Q) = 12.

(a) Calculate the elasticity of demand, as a function of Q.

(b) Does the firm’s profit maximization problem satisfy the global SOC?

(c) Using your answers to (a) and (b), what is the firm’s profit-maximizing markup? (Justify your answer carefully. Do not forget about the possibility of a boundary solution.)

(d) Based on your answer to (c), what is the firm’s profit-maximizing price?

(e) Based on your answer to (d), what is the firm’s profit-maximizing quantity?

Reference no: EM13896713

Questions Cloud

When you hear the word scientist what do you envision : There is nothing like reading a good book or watching a great movie for a little escapism and entertainment. With all of the television channels out there and access to the internet, you can watch just about anything you want at any time. When you he..

What price should it charge : Suppose instead that the stations seek to maximize its profits from sales of the DVDs. What price should it charge? How many DVDs should it order from which supplier?

Do you think a leader should focus on level one : Do you think a leader should focus on level one, or should he (or she) deal with level 2 and 3, even though some people may think this is unethical (Clawson, 2012)

About the population : If the population of Argentina was 26.5 million in 1960 and the average population growth rate is 0.6 percent per year, then Argentina's population would have been about ______ in 2000.

The firms marginal cost of production is constant : The demand function for a firm’s product is Q = P^(-3). The firm’s marginal cost of production is constant at MC(Q) = 12. Calculate the elasticity of demand, as a function of Q. Based on your answer to (c), what is the firm’s profit-maximizing price?

Explain how the sarbanes-oxley act affects the internal : Explain how the Sarbanes-Oxley Act affects the internal control

A random walk process with drift : A random walk process with drift:

What effect will this have on its optimal price : The company's settlement obligations are expected to raise its average total cost per pack by about $.60. What effect will this have on its optimal price?

Instrumental variables : Instrumental variables:

User Account

All Pages