The demand and cost estimates Q = 90 - 6.5P and TC = 150 + 3.5Q
Unfortunately what we didn't realize at the time that our fixed cost were underestimated by at least 30 percent. this means that we'll have to adjust
upward our price by at least 30 percent to cover the added fixed cost. In any case
theer is no way to in the world that we can survive by charging less than $9 for our product.
1) Comment on the statement. Do you agree with the speaker? Explain. Use a graph to illustrate the answer indicating the firm's short-run cost structure.
2) What price should the firm charge if it wants to maximize its short-run profit.