Demand Curve Mangerial Assignment
Demand Curve Mangerial Assignment
Demand Curve Mangerial Assignment
Solution
a. Quantity of T-shirts at the price $4.50 is:
1,500 – 200P = 0
200P = 1,500
P = $7.5
d. How many T-shirts could be given away?
I assume could be given away is “for free” P=0
𝑄 = 1,500 – 200𝑃
Q= 1500-200*0
Q= 1500
e. Quantity at the price of $5:
∆Q
is the marginal change∈quantity following a 1unit change ∈price ,=−200
∆P
∈ 5 −10 ∈ p=¿−2 ¿
p=¿−200 × = ¿
500 5
A. Calculate the point price elasticity of demand for Harrison Ford Focus SE sedans.
B. Calculate the profit-maximizing price per unit if Harrison Ford has an average wholesale
cost of $10,000 and incurs marginal selling costs of $875 per unit.
Solution:
A. Point price elasticity of demand for Harrison Ford Focus SE sedans:
B. The profit maximizing price or optimal Price can be determined by equating marginal
costs with marginal revenue. MC=MR
1
MR=P 1+ ( ∈P )
1
therefore , MC=P 1+ ( ∈P )
MC
Profit maximizing p∗¿
1
(1+ )
∈P
MC
Profit maximizing P∗¿
1
(1+ )
∈P
MC=$ 875