Elixir Spring produces a unique and highly priced mineral water. The firm\'s tot
ID: 1251942 • Letter: E
Question
Elixir Spring produces a unique and highly priced mineral water. The firm's total fixed cost is $5 a day, and its marginal cost is $1. The table below shows the demand schedule for Elixir water.
Price
(dollars per bottles)
Quantity
(bottles per day)
Total Revenue
Marginal Revenue
10
0
0
9
1
9
9
8
2
16
8
7
3
21
7
6
4
24
6
5
5
25
5
4
6
24
4
3
7
21
3
2
8
16
2
1
9
9
9
0
10
0
0
b. Calculate Elixir's profit maximizing output___ profit maximizing price_____ and economic profit_____
c. What is the elasticity of demand for Elixir water at the profit maximizing quantity?____
Price
(dollars per bottles)
Quantity
(bottles per day)
Total Revenue
Marginal Revenue
10
0
0
9
1
9
9
8
2
16
8
7
3
21
7
6
4
24
6
5
5
25
5
4
6
24
4
3
7
21
3
2
8
16
2
1
9
9
9
0
10
0
0
Explanation / Answer
Just to emphasize what I put in my comments, the profit maximizing price is $5 and the profit maximizing quantity is 5. Revenue is $25, costs are 5+5=$10, profit is $15.
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