a) A firm faces the demand curve: P = 180 - 5Q. Assume that this firm’s cost function is TC = 12 + 5Q2. What level of production maximizes profit?
b) Assume that we have another firm:
P = 12 when profit is maximized and TC = 3 + 4Q. Find the elasticity at this price using optimal markup rule.
c) Assume that John inherits 80 calculators. He can sell these calculators in two markets: directly to students on campus, and sell them online.
Here are the two demand equations:
Student Demand: Ps = 400 – 3Qs
Online Demand: Po = 550 – 4Q0
If John's goal is to maximize total revenue, how many calculators will he sell to students on campus? How many calculators will he sell online?