pricing

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October 14, 2017 at 10:00 am #410907
adarsh1997
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A company’s demand curve is P = 34 – 0.05Q. It experiences some cost discounts if it produces 200 units or more, so its cost function is as follows:
TC = 1,500 + 3Q (up to Q = 199)
TC = 1,900 + 2.8Q (if Q = 200 or more)
What is the optimum selling quantity and price, to the nearest $0.01?

1. How to tackle this question in terms of how to deal this cost discount?
October 14, 2017 at 4:50 pm #410982
John Moffat
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Use the normal MC = MR approach on each cost function separately and see what happens, and choose whichever gives the highest profit.
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