Question

Assume the demand for widgets is linear. Suppose we know the demand is = 100 widgets when the price is = $3 per widget but the demand DECREASES by 20 widgets for EVERY $1 increase in price.
(a) Find an expression for the demand function. (Hint: This means write = () = + .)

(b) Use the demand equation to express the revenue as a function of . (Hint: () = ⋅ AND you have in terms of from part (a))

(d) Assume the cost function is given by () = 2 + 100. Find an expression for the profit function ().

(e) Use the profit function to find the break-even quantity. Are there multiple in this case?

Answer 1

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