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    optimal price for XYZ Corp

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    Market Researchers at XYZ Corp. estimate that the demand function for the firm's product is

    Q=50P ^-1.5 I ^0.5

    Q= Quantity Demanded P= Product's Price I= Per Capita Disposable Income

    Marginal Cost of the firm's product is estimated to be $10. Population is constant.

    XYZ's price for the product is $20. Is this the optimal price? Why or why not? If not what would be the optimal price?

    © BrainMass Inc. brainmass.com March 4, 2021, 8:08 pm ad1c9bdddf

    Solution Preview

    We can re-write the demand curve into:
    P ^1.5 = 50 I ^0.5 / Q
    (P^1.5)^(2/3) = (50 I ^0.5 / Q)^(2/3)

    The firm's total revenue is
    TR = Q*P = Q * (50 I ^0.5 / Q)^(2/3) = (50 I ^0.5)^(2/3) * ...

    Solution Summary

    This job figures optimal price.