XL. Corp has estimated its demand and cost functions to be as follows: P=60-0.20 C=200+ 40...

 

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XL. Corp has estimated its demand and cost functions to be as follows: P=60-0.20 C=200+ 40 +1.20² where Q is in units, P is in $ and C is in $. a. Calculate the profit-maximizing price and output. b. Calculate the size of the profit. c. Calculate the price elasticity of demand at the above price. d. If there is a $14 tax placed on the good, so that the producer has to pay the government $14 for every unit sold, calculate the new profit- maximizing price and output. e. What would happen to profit if the firm tried to pass on all the tax to the consumer in the form of a higher price? f. If fixed costs rise by $200 how would this affect the firm's situation? XL. Corp has estimated its demand and cost functions to be as follows: P=60-0.20 C=200+ 40 +1.20² where Q is in units, P is in $ and C is in $. a. Calculate the profit-maximizing price and output. b. Calculate the size of the profit. c. Calculate the price elasticity of demand at the above price. d. If there is a $14 tax placed on the good, so that the producer has to pay the government $14 for every unit sold, calculate the new profit- maximizing price and output. e. What would happen to profit if the firm tried to pass on all the tax to the consumer in the form of a higher price? f. If fixed costs rise by $200 how would this affect the firm's situation?

Answer rating: 100% (QA)

Answer b2 d f P60020 C 200 40 120 Profit is max when MRMC 4240 60049 200 56 0... View the full answer