3. Assume that you are an economic consultant. The firm that hired you has provided the information below. The firm is a price searcher and wants to maximize its profit (or minimize its loss). Information Price: $4 Elasticity of demand at price of $4 is Ed=-1 Quantity of output: 2000 Total variable cost: 4000 Average fixed cost: 1 Marginal cost is constant and equal to the average variable cost: MC=AVC=2.
3. Assume that you are an economic consultant. The firm that hired you has provided the information below. The firm is a price searcher and wants to maximize its profit (or minimize its loss). Information Price: $4 Elasticity of demand at price of $4 is Ed=-1 Quantity of output: 2000 Total variable cost: 4000 Average fixed cost: 1 Marginal cost is constant and equal to the average variable cost: MC=AVC=2.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter3: Demand Analysis
Section: Chapter Questions
Problem 1.4CE
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