Q1. Given cost function f(x) = 1/2(c)(x2), where c>0, and demand curve y(z) = z-a, where a > 1 a). Compute price elasticity of demand. b). Draw a diagram showing marginal cost and marginal revenue c). Find price and output that maximize profits d). Find the markup (price divided by marginal cost). Does it increase or decrease based on elasticity of demand?
Q1. Given cost function f(x) = 1/2(c)(x2), where c>0, and demand curve y(z) = z-a, where a > 1 a). Compute price elasticity of demand. b). Draw a diagram showing marginal cost and marginal revenue c). Find price and output that maximize profits d). Find the markup (price divided by marginal cost). Does it increase or decrease based on elasticity of demand?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Q1. Given cost function
f(x) = 1/2(c)(x2), where c>0,
and
y(z) = z-a, where a > 1
a). Compute
b). Draw a diagram showing marginal cost and marginal revenue
c). Find price and output that maximize profits
d). Find the markup (price divided by marginal cost). Does it increase or decrease based on elasticity of demand?
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