Question

ABC Co is estimating next year’s profit. Due to the presidential election and pandemic market demand is uncertain. The estimated inverse demand that shows that 40% of the time P=5,000 – 10Q and the 60% time P= 4,000 – 20Q. The firm’s cost function is C(Q) = 100,000+ 400Q. What is the expected profit maximizing quantity and expected profit?

Answer 1