Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Question
Chapter 8, Problem 7CACQ
(A)
To determine
The inverse demand function of the firm is to be ascertained.
(B)
To determine
The profit maximizing level of output and
(C)
To determine
The maximum profits is to be calculated.
(D)
To determine
Long run adjustments that should be expected is to be explained.
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Q1: Analytical part - 8%
Best Orange Juice Company is located in Oman. The cost function for total orange juice
production (x) is given by C(q) = 0.25x2. Their orange juice is demanded only in Muscat (Muscat
demand is Xm- 100-2Pm) and Salalah (Salalah demand is X 100-4Ps). Therefore, the total
demand is x-xm+ Xs. If the company can control the quantities supplied to each market, how many
should it sell in each location to maximize total profits? What price would it charge in each
location?
Answer:
Q1: Analytical part – 8%
Best Orange Juice Company is located in Oman. The cost function for total orange juice
production (x) is given by C(q) = 0.25x². Their orange juice is demanded only in Muscat (Muscat
demand is xm- 100-2Pm) and Salalah (Salalah demand is x,- 100-4P,). Therefore, the total
demand is x-Xm+ Xs# If the company can control the quantities supplied to each market, how many
should it sell in each location to maximize total profits? What price would it charge in each
location?
Answer:
Chapter 8 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
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