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Finding the optimal price and output levels

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2. Your company sells its product online and in stores. Your marginal cost $30 is the same in both markets. The demand and marginal revenue curves in the two markets are different however.
Qonline = 1,000-2 Ponline
MRonline = 500-Qonline

Qstores = 200-Pstores
MRstores = 200-2 Qstores

2.1 What is the profit maximizing price level in each market?

2.2 At those prices, what output is sold in each market?

2.3 Which market has a more elastic demand?

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2.1 What is the profit maximizing price level in each market?

Online :
Profit will be maximized when MRonline=MC.

Qonline =1000-2 Ponline
Put ...

Solution Summary

Solution describes the steps to calculate optimal price and output combination in each of the given market segments.

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Finding optimum price and output levels..

Perfect Competition
Given the following equations:

Number of firms =85

Assume Income =11000.
i.What is the market supply equation?
ii.What is the market equilibrium price ?
iii.What is the market equilibrium quantity?
iv.What is the profit maximizing output (PMO) level?
v.What is the average profit and total profit at this PMO level?

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