Question

Demand function - Qd = 200-5(own price)+2(Alpha price)+2(Beta price). Cost Function = 200-20Q MC = $20...

Demand function - Qd = 200-5(own price)+2(Alpha price)+2(Beta price).

Cost Function = 200-20Q

MC = $20

What is the inverse demand function?

Solve for MR = MC as well.

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Homework Answers

Answer #1

Demand Function: Qd= 200-5(own price)+2(Alpha price)+2(Beta price).

Own Price= (200/5)+(2/5)(Alpha Price)+(2/5)(Beta Price)- (1/5)Qd

Own Price= 40+0.4(Alpha Price)+0.4(Beta Price)-0.2Qd

Inverse demand function: Own Price= 40+0.4(Alpha Price)+0.4(Beta Price)-0.2Qd

Total Revenue= 40Qd+0.4(Alpha Price)Qd+0.4(Beta Price)Qd- 0.2Qd​​2

Marginal Revenue= 40+0.4(Alpha Price)+ 0.4(Beta Price)- 0.4Qd

Marginal Revenue= Marginal Cost

40+0.4(Alpha Price)+ 0.4(Beta Price)- 0.4Qd= 20

40+0.4(Alpha Price)+ 0.4(Beta Price)-20= 0.4 Qd

Qd= 100+(Alpha Price)+(Beta Pridet)- 50

Qd= 50+(Alpha Price)+(Beta Price)

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