What were its profit maximizing quantity and price

Reference no: EM13696724

When the iPad was introduced, Apple’s, Apples constant marginal cost of producing this iPad was about $220. We estimate that Apple’s inverse demand function for the iPad was P= 770 – 11Q, where Q is millions of iPad purchased.

a. What were its profit maximizing quantity and price? Show all your work.

b. Given that the Lerner’s index for the iPad was (P – MC)/p = 0.56, what was the elasticity of demand at the profit maximizing level. Show your work.

Reference no: EM13696724

Questions Cloud

What is the equilibrium quantity of martin guitars : Suppose you are hired by the Martin guitar company as an economic consultant. You estimate the demand for Martin guitars to be Q = 8000 – 2P. Suppose the supply of Martin Guitars is given by Q = –2000 +3P. What is the equilibrium price of Martin guit..

Derive the average cost-the marginal costs : A production function is given by F(K,L) =2L(K)^1/2 (note output q= F(K,L)). In the short run K=25, and r =5, and wages are given by w. Derive the average cost, the marginal costs, and the total cost of this production function. Does it possess the p..

Level of income per capita-growth rates of income per capita : Suppose there are two countries. In the rich country the representative consumer has Hr units of human capital, and total factor productivity is Zr. In the poor country, the representative consumer has Hp units of human capital, and total factor prod..

Fixed costs are determined at the normal : 1) Fixed costs are determined at the "normal"/"planned" volume level. At any other level of volume, total fixed costs don't change (so by default, fixed costs per unit are different at any different volume).

What were its profit maximizing quantity and price : When the iPad was introduced, Apple’s, Apples constant marginal cost of producing this iPad was about $220. We estimate that Apple’s inverse demand function for the iPad was P= 770 – 11Q, where Q is millions of iPad purchased. What were its profit ma..

The jury in the medtrans deloitte lawsuit ruled : The jury in the MedTrans v. Deloitte lawsuit ruled that the accounting firm negligently resigned from the 1992 audit, breached its contract with the client, and made defamatory statements regarding MedTrans' former executives during the predece..

Competitive market is initially in long-run equilibrium : "Assume a perfectly competitive market is initially in long-run equilibrium. In the short run, a decrease in raw materials prices will cause the firm's average costs to ________. As a result, the profits of existing firms will ________.

A local partnership is considering possible liquidation : A local partnership is considering possible liquidation because one of the partners (Bell) is insolvent. Capital balances at the current time are as follows. Profits and losses are divided on a 4:3:2:1 basis, respectively.

Determine the firm price-output and profits : You are the manager of a monopolistically competitive firm. Your demand function is: p=25-Q, and your cost function is : TC=5Q. Respectively MR=25-2Q and MC=5. Determine the firm price, output and profits. Explain. What will happen in the market in t..

User Account

All Pages