1. Jimmy Joe Bob, the self-processed truck king of Dog Patch Arkansas, sells used trucks (which he spells "trux"). The normal demand curve for Jimmy's trucks is: QD = 100 -0.03P+ 0.0045PB-0.6PG +0.0051 +.012A Where Q-D is quantity demanded, P is the price of JJB's trucks, PB is the price of Bubba Will's - Jimmy's only competitor – trucks, PG is the price of gas, I is income, and A is JJB's advertising expenditures. A) If Jimmy sets his price at $4000, Bubba sets his price at $3000, the price of gas is $3.00 per gallon, average income in the community is $2500 and Jimmy spends $500 on advertising how many trucks does Jimmy sell? B) Derive the inverse demand curve for Jimmy's trucks. C) If the marginal cost of selling a truck is $2800 how many trucks should Jimmy sell to maximize his profits, and at what price should he sell those trucks? D) At that price and quantity what are Jimmy's profits?

1. Jimmy Joe Bob, the self-processed truck king of Dog Patch Arkansas, sells used trucks (which he spells "trux"). The normal demand curve for Jimmy's trucks is: QD = 100 -0.03P+ 0.0045PB-0.6PG +0.0051 +.012A Where Q-D is quantity demanded, P is the price of JJB's trucks, PB is the price of Bubba Will's - Jimmy's only competitor – trucks, PG is the price of gas, I is income, and A is JJB's advertising expenditures. A) If Jimmy sets his price at $4000, Bubba sets his price at $3000, the price of gas is $3.00 per gallon, average income in the community is $2500 and Jimmy spends $500 on advertising how many trucks does Jimmy sell? B) Derive the inverse demand curve for Jimmy's trucks. C) If the marginal cost of selling a truck is $2800 how many trucks should Jimmy sell to maximize his profits, and at what price should he sell those trucks? D) At that price and quantity what are Jimmy's profits?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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