The manufacturer of electronic fans is trying to decide what price to set for its product. The demand and cost function are assumed to be as follows: P = 90-2.5Q TC= 80 +60Q-1.5Q²

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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The manufacturer of electronic fans is trying to decide what price to set for its
product.
The demand and cost function are assumed to be as follows:
P = 90-2.5Q
TC= 80 +60Q-1.5Q²
Questions:
(a) What price should the company charge if it wants to maximize its profit in
the short run? What is the optimal quantity for the electronic fan following this
optimal price?
(b) What price should it charge if it wants to maximize its revenue in the
short run? What is the optimal quantity for the electronic fan under this price?
What will be the maximized revenue?
Transcribed Image Text:The manufacturer of electronic fans is trying to decide what price to set for its product. The demand and cost function are assumed to be as follows: P = 90-2.5Q TC= 80 +60Q-1.5Q² Questions: (a) What price should the company charge if it wants to maximize its profit in the short run? What is the optimal quantity for the electronic fan following this optimal price? (b) What price should it charge if it wants to maximize its revenue in the short run? What is the optimal quantity for the electronic fan under this price? What will be the maximized revenue?
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