Determine the profit-maximizing price, Microeconomics

Determine the Profit-Maximizing Price

If a firm targets a 25 % rate of return on sales, and has unit costs of production of $100, what price should it charge if it uses cost-plus pricing?  If the firm has a demand function P = 10000 – 20Q is the cost-plus price the profit-maximizing price?  If not, determine the profit-maximizing price, quantity and corresponding profit.   Is the target rate of return the profit-maximizing r.o.r.? why or why not?  What important economic considerations, does cost-plus pricing ignore?

Posted Date: 2/15/2013 2:43:38 AM | Location : United States

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