Gazelle Corp, a sports shoe firm, is currently selling 800 pairs of a certain shoe per month.
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 Gazelle Corp, a sports shoe firm, is currently selling 800 pairs of a certain shoe per month.

It is currently charging a price of £80, but this has recently been reduced from £90, because sales were only reaching 750 units per month. Its total costs are £56,000 per month, and these have risen £3000 due to the increase in sales.

a)   Derive the cost and demand functions for the firm, assuming these are both linear.

b)   Calculate the profit-maximizing price and output.

Top Answer

a).demand function, Q=-5P+1,200 cost function... View the full answer

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