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Assignment help 6683

Suppose that the Demand for a product X has been estimated to be: 

Qx = 400 + 0.002I + 8Z – 5Py – 20Px

Where Qx is the quantity demanded for the product X, Px is the price of product X, Py is the price of a related product Y, I is the level of income, and Zis some other variable that affects the demand for product X.

Current values of the variables are: I = 10,000; Z = 150; Py = 50; Px = 50

Construct the demand, inverse demand, and marginal revenue equations for product X. Also find the revenue maximizing quantity and price.

Demand Curve Equation:                   Qx        =          ___________________________

Inverse Demand Curve Equation:      Px       =         ___________________________

Marginal Revenue Equation: MRx  =         ___________________________

Revenue Maximizing Quantity__________________

Revenue Maximizing Price _____________________

Assuming marginal cost equals 20, what is the profit-maximizing price and quantity for product X?

P* = _____________________                                   Q* = _____________________________

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