Question 7 A firm, focusing on producing toothpaste has a demand function 2? = 10 − 0.25?. If fixed cost per unit is -(+ and variable cost per unit function is 2? − 20 + -)), where Q is number of toothpastes produced and P is the price per toothpaste: a) Determine the number of toothpastes that maximizes the company’s profit. b) How much should the firm charge for one toothpaste? c) Find the total profit at the profit maximizing level of output.
Question 7 A firm, focusing on producing toothpaste has a demand function 2? = 10 − 0.25?. If fixed cost per unit is -(+ and variable cost per unit function is 2? − 20 + -)), where Q is number of toothpastes produced and P is the price per toothpaste: a) Determine the number of toothpastes that maximizes the company’s profit. b) How much should the firm charge for one toothpaste? c) Find the total profit at the profit maximizing level of output.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: Monopoly
Section: Chapter Questions
Problem 6PA
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Question 7
A firm, focusing on producing toothpaste has a demand function 2? = 10 − 0.25?. If fixed cost per unit is -(+ and variable cost per unit function is 2? − 20 + -)), where Q is number
of toothpastes produced and P is the price per toothpaste:
a) Determine the number of toothpastes that maximizes the company’s profit.
b) How much should the firm charge for one toothpaste?
c) Find the total profit at the profit maximizing level of output.
d) Using the own price elasticity of demand, comment on the firm's pricing policy
options.
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