Calculate the revenue-maximizing price-output combination

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Reference no: EM131372806

On weekends during summer months, Eric Cartman rents jet skis at the beach on an hourly basis.  Last week, Cartman rented jet skis for 20 hours per day at a rate of $50 per hour. This week, rentals fell to 15 hours per day when Cartman raised the price to $55 per hour.

Using these two price-output combinations, the relevant linear demand and marginal revenue curves can be estimated as

P = $70 - $10       and        MR = $70 - $2Q

Calculate the revenue-maximizing price-output combination.  How much are these maximum revenues?  If marginal cost is $30 per hour, calculate prifits at this activity level, assuming TC = MC * Q.Calculate the profit-maximizing price-output combination along with revenues and profits at this activity level.

Reference no: EM131372806

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