calulate the deman for a new product from a monopolistic company.

Krarup · 2006-09-26 00:21:59

The demand for a new product is given by: p =10 - 0,01M

P is the price, and M is the production.

By the above, I can see that demand curve will hit the price axis in 10. But how do I figure where the curve will hit the y-axis?

mathsyperson · 2006-09-26 02:30:16

The y-axis is when x = 0. In this case, x is the price, so you need to solve 0 = 10 - 0.01m

This is the same as 0.01m = 10, which means that m = 1000.

So that means that it will cross the y-axis at 1000. (Although I think in reality there would be a lot more demand for something that was free. )

krarup · 2006-09-26 03:04:05

So simple (:

Then I have just a another question.

The marginal revenue is defined by 10-0.02M so, it will hit the y axis at 5000.

The question is then, what price and production should the company chose?

krarup · 2006-09-26 03:08:37

Oh, thats simple too (;
5000 at a price a 5, would give the most benefit

Just talking to myself

George,Y · 2006-09-27 23:54:52

Not necessarily. You have to take both the revenue and the cost into account and find the profit peak.

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