Question

Question is attached

Answer 1

1. Optimal unit is 40

2. The firm should chare $80

How do we solve for the optimal number of unit and unit price?

1. Determine the optimal number of units to put in a package.

Given that
`Q^d`= 60 - 0.25P

marginal cost of production is $80

60 - 0.25(80)

optimal number of units = 40

2. b. How much should the firm charge for this package?
given that the optimal number of units is indeed 40

40 = 60 - 0.25p

P = 80

or

0.25P = 60 - Q
P = 240 - 4Q
P = 240 - 4(40)
P = 240 - 160
P = 80