Why might zenvox choose to produce at a price

Reference no: EM13189975

The Zenvox TV Company faces a demand function for its products that can be expressed as Q = 4,000 - P + 0.5i, where Q is the number of tv's, P is the price per tv, and i is the average monthly income. Average monthly income is currently equal to $2.000.

a. Graph the demand curve (sometimes called the "inverse" demand curve) face by Zenvox at the current income level. Be sure to label this and all graphs you draw carefully. On the same graph, depict marginal revenue. At what price and quantity is Zenvox's total revenue maximized? What is the marginal revenue at this point? Show calculations.

b. What is the price elasticity of Zenvox's demand function at the price and quantity depicted in part a? Explain what this value means in words.

c. Why might Zenvox choose to produce at a price and quantity different than that derived in part a?

Reference no: EM13189975

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