A company produces a special new type of TV. The company has fixed costs of $494,000, and it costs $1100 to produce each TV. The company projects that if it charges a price of $2500 for the TV, it will be able to sell 700 TVs. If the company wants to sell 750 TVs, however, it must lower the price to $2200. Assume a linear demand. What price should be set to earn maximum profits?
A company produces a special new type of TV. The company has fixed costs of $494,000, and it costs $1100 to produce each TV. The company projects that if it charges a price of $2500 for the TV, it will be able to sell 700 TVs. If the company wants to sell 750 TVs, however, it must lower the price to $2200. Assume a linear demand. What price should be set to earn maximum profits?
Chapter18: Asymmetric Information
Section: Chapter Questions
Problem 18.3P
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A company produces a special new type of TV. The company has fixed costs of $494,000, and it costs $1100 to produce each TV. The company projects that if it charges a price of $2500 for the TV, it will be able to sell 700 TVs. If the company wants to sell 750 TVs, however, it must lower the price to $2200. Assume a linear
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