Question

The demand function is Q = 100 – .5P. The cost function is TC = C = 100 + 60(Q) + (Q)2
a. Find MR and MC.
b. Demonstrate that profit is maximized at the quantity where MR = MC.
c. Derive the relationship between marginal revenue and the price elasticity of demand, and show that the profit-maximizing price and quantity will never be the unit-elastic point on the demand curve.
d. Using the information in part b, demonstrate that the profit-maximizing price and quantity will never be in the inelastic portion of the demand curve.



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  • CreatedSeptember 27, 2014
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