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1. A company has an inverse demand function p 8-0.0040, and a total cost function TC 0.00602. (p is in dollars, and Q is in thousands of units). Q+ (1) What is the optimal price p* and quantity Q* to maximize its profit? (2) Graph the marginal revenue function and marginal cost function in the (Q, p) space. What is the slope of each curve? Indicate the intercept of each end point in the graph. Indicate the optimal Q* and p* in the graph. (3) What is the point elasticity of demand at (Q, p Rounding to two decimal places. 4) Suppose now the company adopts a more efficient technology, and the cost of producing each additional unit reduces by 50 cents. What is the new marginal cost function? What is the new optimal price and quantity, i.e., Qnew and pnew? (Hint: the marginal cost reduces by 0.5 dollar).

*I am looking for the answer for #4. I have gotten all the work done from #1-#3.

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Answer #1

d& 5 t .012 &, MR= 8-。。0863 80 8- 00 8851.0128

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