What is the profit-maximizing price and quantity

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Reference no: EM13984083

How many homes should be built in a new residential area. The firm has some monopoly power in its local market. Its demand is estimated to be Q = 10 - 1/6 P

Its cost function is C = 70 + 8Q + 1/2 Q2 (Price is in tens of thousands, quantity is in units.)

a. What is the revenue-maximizing price and quantity? Explain.

b. What is the profit-maximizing price and quantity? Explain.

c. Can you recommend any pricing strategy that would further improve profit beyond the profit-maximizing level? Explain such strategy and its implementation.

Reference no: EM13984083

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