ack sells 40 widgets when it charges a price of $40 per widget, and 10 widgets when it charges a price of $100 per widget. Assume the demand for widgets is linear. Write down the inverse demand function of Jack's customers.

ack sells 40 widgets when it charges a price of $40 per widget, and 10 widgets when it charges a price of $100 per widget. Assume the demand for widgets is linear. Write down the inverse demand function of Jack's customers.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter5: Price Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 18SQ

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Jack sells 40 widgets when it charges a price of $40 per widget, and 10 widgets when it charges a price of $100 per widget. Assume the demand for widgets is linear. Write down the inverse demand function of Jack's customers.

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Shell has over 13,000 gas stations in the United States. In addition to gasoline, the gas stations also sell convenience items, such as snacks, non-alcoholic beverages, wine, beer, and hot food. Suppose you work for a gas station and your boss asks you to develop a pricing strategy for bottled local wine. The demand function is ? = 100 – 4?, where ? is the monthly quantity demanded of the bottled wine and ? is the price of the bottled wine. The marginal cost per bottle of wine is $5. Complete the following tasks: 1) (Calculating) In the worksheet “Q2 Calculations” of the provided Excel file, enter formulas in columns B-D to calculate Q (quantity demanded), MC (marginal cost), and MR (marginal revenue). Please round your results to one decimal place. Note that the inverse demand function is ? = 25 − 0.25? and that the MR function can be derived from the inverse demand function using the formula introduced in Module 5. You may find it helpful to review the Excel file for Chapter 11.
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