1. Given the following demand and cost functions, determine the output and sales level that maximize profit.
Demand Function: Q = 25- P; Cost Function: TC = 20+5Q +Q2 20 Units
200 Units
5 Units
None of the Above
2. Assume the price of product B, increases from $1 to $1.50. As a result, the quantity demanded of product "A increases from 500 to 600 a month. This indicates that the cross-price elasticity and relationship between the two products.
.50, Substitutes
.45, Substitutes
.45, Complements
.50, Complements
Products are not related
3. Given the marginal revenue from a product is $15 and the price elasticity of demand is -1.2, what is the price of the product?
Not enough Information
$8
$88
$42
$68
4. Given the demand function: QD = -10-2.1 P +.62 Y. Where P is price and Y is Income
For a 1% increase in price, quantity demanded falls by 2.1%
For a 1% increase in price, quantity demanded increases by .62%.
For a 1% decrease in price, quantity demanded increases by 2.72%
None of the above