1. Katherine advertises to sell cookies for $4 a dozen. She sells 50 dozen, and decides...
1. Katherine advertises to sell cookies for $4 a dozen. She
sells 50 dozen, and decides that she can charge more. She raises
the price to $6 a dozen and sells 30 dozen. What is the elasticity
of demand? Assuming that the elasticity of demand is constant, how
many would she sell if the price were $8 a box?
2. Acmes marginal cost for producing the 100th unit of good Y is
$20. Acme can sell good Y for $25. Given this information, what
recommendation would you make to Acme in terms of how much they
produce?
equation to use
Inverse Demand Function: ? = 20 − .1?
¤ Total Revenue Function: ?? = ? ∗ ?
Average Cost Function: ?? = TC/Q =4
Total Cost: ?? = ?? ∗ ?
(Q1-Q2)/(Q1) / (P1-P2)/(P1)
Homework Answers
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1. Katherine advertises to sell cookies for $4 a dozen. She
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