Question

14. Given a cost function C(Q) = 400 + 18Q + 6Q2 , what is the...

14. Given a cost function C(Q) = 400 + 18Q + 6Q2 , what is the marginal cost function? a. 18 + 12Q. b. 18 + 12Q2. c. 400 + 6Q2. d. 18Q + 6Q2.

15. Calculate the price elasticity of demand at price P = $8.50, given demand equation Q = 184 – 4P. _________________

16. Given the (inverse) demand equation P = 902 – 11Q:


16a. Write the equation for the marginal revenue MR: ____________________________

16b. At what value of Q is total revenue maximized? _________________________

16c. At what value of P is the price elasticity of demand unit elastic? ______________

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Answer #1

Q14
ANswer
MC is the change in total cost and a change in function found by differentiation
MC=dTC/dQ=18+12
MC=18+12Q

option a
-----------------
Q15
answer

price elasticity of demand =(dQ/dP)*Q
dQ/dP=-4 ........... first differentiation of the demand equation
Q=184-4*8.5=150
price elasticity of demand=(-4)*(8.5/150)
=-0.22666666666

--------------------
Q16
a)

MR=902-22Q .......... the MR curve is double sloped than the demand curve

b)
total revenue is maximum when MR=0
equating MR=0
902-22Q=0
Q=902/22
Q=41

c)
the demand is unit elastic when revenue is maximum
P=902-11*41=451

P=

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