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Suppose the microchip producer discussed in this chapter faces demand and cost equations given by Q = 8.5 05P and C = 100 38Q Choosing to treat price as its main decision variable it writes

  1. Suppose the microchip producer discussed in this chapter faces demand and cost equations given by Q = 8.5 - .05P and C = 100 + 38Q. Choosing to treat price as its main decision variable, it writes profit as

 

1r = R - C

= [P(8.5 - .05P)] - [100 + (38)(8.5 - .05P)]

= -423 + 10.4P - .05P .

 

Derive an expression for M1r = d1r/dP. Then set M1r = 0 to find the firm’s optimal price. Your result should confirm the optimal price found earlier in the chapter.

Jun 19 2020 View more View Less

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