Crystal Ball Corp. has estimated its demand and cost functions as follows: Q=80-5P C=30+20 +0.50 where...

 

Transcribed Image Text:

Crystal Ball Corp. has estimated its demand and cost functions as follows: Q=80-5P C=30+20 +0.50² where P is in $. Q is in thousands of units and C is in $,000. a. Calculate the profit-maximizing price and output. b. Calculate the size of the above profit. c. Calculate the price elasticity of demand at the above output; is demand elastic or inelastic here? What should it be? d. Calculate the marginal cost at the above output. e. If unit costs rise by $2 at all levels of output and the firm raises its price by the same amount, what profit is made? f. What is the profit-maximizing strategy given the above rise in costs? g. How much profit is the firm forgoing by raising its price $2? Crystal Ball Corp. has estimated its demand and cost functions as follows: Q=80-5P C=30+20 +0.50² where P is in $. Q is in thousands of units and C is in $,000. a. Calculate the profit-maximizing price and output. b. Calculate the size of the above profit. c. Calculate the price elasticity of demand at the above output; is demand elastic or inelastic here? What should it be? d. Calculate the marginal cost at the above output. e. If unit costs rise by $2 at all levels of output and the firm raises its price by the same amount, what profit is made? f. What is the profit-maximizing strategy given the above rise in costs? g. How much profit is the firm forgoing by raising its price $2?