# Profit maximization

A firm has capacity limitations and charges $30 for their service during daily peak times. If the market demand elasticity drops from -3 during peak times to -5 at off peak times, how much should the firm charge to earn the maximum profit during off peak times?

A. $20

B. $21

C. $24

D. Not enough information to determine

https://brainmass.com/economics/cost-benefit-analysis/firm-capacity-limitations-charges-service-179136

#### Solution Preview

By formula, at the optimal price the following equation holds (peak ...

#### Solution Summary

The solution answers the question below. The firm's capacity limitation and charges for their services are determined.

$2.19