question archive The Ali Baba Co is the only supplier of a particular type of Oriental carpet
The Ali Baba Co is the only supplier of a particular type of Oriental carpet
Subject:EconomicsPrice: Bought3
The Ali Baba Co is the only supplier of a particular type of Oriental carpet. The estimated demand for its carpets is Q= 112,000 – 500P + 5M, where Q= number of carpets, P= price of carpets (dollar per unit), and M= consumers income per capita. The estimated average variable cost function for Ali Baba’s carpets is AVC= 2000 – 0.012Q + 0.000002Q2 Consumers income per capita is expected to be $20,000 and total fixed cost is $100,000 #1. How many carpets should the firm produce in order to maximize profit? #2. What is the profit maximizing price of carpets? #3. What is the maximum amount of profit that the firm can earn selling carpets? #4. Answer parts a through c if consumer’s income per capita is expected to be $30,000 instead.
