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.