b ) By how much should domestic auto makers increase sales by 5 percent next year ?
Problem 14 : Suppose that a firm maximizes its total profits and has a marginal cost of production of $ 8 and price elasticity of ( - ) 3 . Find the price at which the firm sells the product .
Problem15 .
The research department of the Corn Flakes Corporation CFC estimated the following regression for the demand of the cornflakes it sells :
QX = 1.0 - 2.0P X + 1.5I + 0.8P Y - 3.0P M + 1.0A
Where QX = sales of CFC cornflakes , in millions of 10- ounce boxes per year
P X = the price of CFC cornflakes , in dollars per 10- ounce box I = personal disposable income , in trillions of dollars per year
P Y = price of competitive brand of cornflakes , in dollars per 10- ounce box
P M = price of milk , in dollars per quart
A = advertising expenditures of CFC cornflakes , in hundreds of thousands of dollars per year
This year , P X = $ 2 , I = $ 4 , P Y = $ 2.50 , P M = $ 1 , and A = $ 2 . Froeb et al .’ s Chapter 6 : Individual problems : 6-1 , 6-3 , and 6-5 .