Explore BrainMass
Share

Explore BrainMass

    Profit maximization

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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

    © BrainMass Inc. brainmass.com October 9, 2019, 9:16 pm ad1c9bdddf
    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