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A Discuss the importance of price elasticity of demand, income elasticity of demand and cross price elasticity of demand to a sales manager selling soft drinks like Coca Cola

A Discuss the importance of price elasticity of demand, income elasticity of demand and cross price elasticity of demand to a sales manager selling soft drinks like Coca Cola

Microeconomics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter11: Price-searcher Markets With High Entry Barriers
Section: Chapter Questions
Problem 14CQ
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QUESTION 1 A Discuss the importance of price elasticity of demand, income elasticity of demand and cross price elasticity of demand to a sales manager selling soft drinks like Coca Cola B. If a firm faces the Marginal Cost schedule MC = 180 + 0.3Q²and the MR schedule is MR = 540 = 0.6Q° and that Total Fixed costs are K65. What is the maximum profit it can make? Assume that the second-order condition for maximum is met C. A firm knows that its price (P) and its output (Q) are related by the expression P = 80– 2Q I) Express Q in tems of P Ti) Use this expression to find an expression for TR in terms of Q lii) Find the value of Q which maximizes TR D)A manufacturer knows that: His TRis given by Revenue = 23Q - Q² %3D His total cost of production is; Cost = 36+ 2Q+ 0.1Q? Where Qis the weekly production in thousands
Transcribed Image Text:QUESTION 1 A Discuss the importance of price elasticity of demand, income elasticity of demand and cross price elasticity of demand to a sales manager selling soft drinks like Coca Cola B. If a firm faces the Marginal Cost schedule MC = 180 + 0.3Q²and the MR schedule is MR = 540 = 0.6Q° and that Total Fixed costs are K65. What is the maximum profit it can make? Assume that the second-order condition for maximum is met C. A firm knows that its price (P) and its output (Q) are related by the expression P = 80– 2Q I) Express Q in tems of P Ti) Use this expression to find an expression for TR in terms of Q lii) Find the value of Q which maximizes TR D)A manufacturer knows that: His TRis given by Revenue = 23Q - Q² %3D His total cost of production is; Cost = 36+ 2Q+ 0.1Q? Where Qis the weekly production in thousands
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