1. If TC = 75 + 15Q and Ep = -2 is P = $30 the optimal price
2. Hula Products has reintroduced the hula hoop to the world and faces a growing demand for its product in two distinct markets: the United States and Europe. Demand in these markets is:
Pu = 20 - .1Qu
Pe = 10 - .05Qe
Where all quantities are expressed in thousands of units (i.e. Q_UQU = 50 means 50 thousand units). The company has an existing stock of 95 thousand hula hoops. How many should be sent to Europe?
1. Price, P = $30 is optimal if Marginal revenue (MR) = Marginal
cost (MC)
MR =
(Absolute value of elasticity of demand is taken. So, Ep = 2)
MC =
So, MR = MC = 15 at P = $30.
Thus, P = $30 is the optimal price.
Note: Please post one question at a time.
1. In what ways was Microsoft’s behaviour (a) against
the public interest; (b) in the public interest?
2. Being locked in to a product or technology is only
a problem if such a product can be clearly shown to be inferior to
an alternative. What difficulties might there be in establishing
such a case?
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