Illustrate what is the profit maximizing price of carpets

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Reference no: EM1345744

Q. "The Ali Bab Co. is the only supplier of a particular type of Oriental carpet. The estimated demand for its carpets is

Q = 110,000 - 500 P + 5 M

where Q = number of carpets, P = price of carpets ($ per unit), and M = consumers' income per capita. Illustrate what is the profit maximizing price of carpets

AVC = 200 + 0.008Q
MC = 200 + 0.016Q

Consumers' income per capita is expected to be $20,000 and total fixed cost is $100,000.

"Illustrate what is the profit maximizing price of carpets?"

Reference no: EM1345744

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