What is johns elasticity of demand at his profit-maximizing

Assignment Help Econometrics

Reference no: EM13212140

John runs the only carwash in town; he is a monopolist. John estimates his daily demand for carwashes is given by the expression Q = 100?4P, where Q is the number of carwashes drivers will purchase at price P. It costs John $5 in electricity, soap, etc to run the carwash once. Additionally, John has fixed costs of $300/day.

a. What price should John set for a carwash? What will be his daily profit at this price?

b. If John were to lower his price by $1, he would sell more carwashes, and still be able to charge a price above his marginal cost. Explain intuitively why it would not be profit-maximizing to do so.
c. What is John's elasticity of demand at his profit-maximizing price? Is it elastic or inelastic? If it is elastic, why does he not lower his price, as this would surely bring in many more customers? If inelastic, why does he not raise his price?

Reference no: EM13212140

Questions Cloud

Explain how many ml of water are needed to dissolve : How many mL of water (density = .997g/ml at 25 degree C) are needed to dissolve 10.0g of NH4NO3 in order to prepare a .100m ammonium nitrate solution?

What is the maximum amount of work : No heat interactions with the environment are allowed. You do not need to describe the details of the process that produces the maximum work, but you do need to describe the final state of the blocks fully.

Calculate the final temperature in the small cylinder : If the filling is done rapidly, calculate the final temperature in the small cylinder, (a) assume that oxygen is an ideal gas with Cv= 5R/2 and (b) using accurate thermodynamic data for oxygen.

Explain what is the mole fraction : what is the mole fraction and b) what is the molality of this compound in the solution? the molar mass of the unknown compound is 45.0 g/mol

What is johns elasticity of demand at his profit-maximizing : John runs the only carwash in town; he is a monopolist. John estimates his daily demand for carwashes is given by the expression Q = 100?4P, where Q is the number of carwashes drivers will purchase at price P. It costs John $5 in electricity, soap..

Determine the blade angles at leading : (a) Determine the blade angles at leading and trailing edges of both the rotor and stator at the mean radii, (b) Calculate the mass flow rate and the power required for each stage.

Sketch and annotate the drive train described above : Sketch and annotate the drive train described above. What's the overall system gear ratio? Formula, Substitute/Solve,

What percentage of washers are discarded : 25 washers have a combined mass of 1 lb. how much money is recovered per day from the sale of scrap washers?

State the equation for the reaction that occurs : Write the equation for the reaction that occurs when Zn is placed in a 1M HCl solution, and determine the net EMF for the reaction.

User Account

All Pages