Unformatted text preview: In the past, they found that when they priced at $450 the demand was 250 and when they priced at $350 the demand was 500. Do you think $400 is a good price? Why or why not? If not, what price would you recommend? 5. An auto manufacturer can manufacture compact cars for an incremental cost of $50000 each. She faces a logit priceresponse function for sales in the next month where market saturation is 40,000 cars, b=0.0005, and market price is $12000. What price will maximize total contribution? How many cars will she sell during the month? 6. Suppose unit cost is $5 and price response is linear (as shown below). Find the optimal single price to charge and the total margin at that price. p p d 500 10000 ) (=...
View
Full Document
 Spring '08
 Staff
 Economics, Supply And Demand, $5, $0, logit model

Click to edit the document details