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A firm with market power faces the following estimated demand and average variable cost functions: Qd = 39,000 - 500 P + 0.4 M - 8,000 PR AVC = 30 - 0.005 Q + 0.0000005 Q 2 where Q d is quantity demanded,
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A firm with market power faces the following estimated demand and average variable cost functions: Qd = 39,000 - 500 P + 0.4 M - 8,000 PR AVC = 30 - 0.005 Q + 0.0000005 Q 2 where Q d is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. What price should the firm charge in order to maximize profit?

User Mikedugan
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5 votes

Answer:

p = $62

Step-by-step explanation:

the pictures herewith shows the whole explanation for the the work. Thank you and i hope the explanation works

A firm with market power faces the following estimated demand and average variable-example-1
A firm with market power faces the following estimated demand and average variable-example-2
User Loris Securo
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