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?
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. )
Why did the vector cross the road?
It wanted to be normal.
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?
Oh, thats simple too (;
5000 at a price a 5, would give the most benefit
Just talking to myself