Q) A benefit-cost study of a proposed dam is conducted. The dam costs $75 million to construct. The study estimates a stream of social benefits of $9….
September 3, 2020
Assume that an insurance agent offers Charline an index insurance contract which is based on temperature (in general, seashell harvest is worse when…
September 3, 2020

Suppose a firm faces the following demand for their product: P=100-Q. Further assume that the marginal cost to produce the product is $10 and that the fixed costs are $15. The firm is thinking of implementing the following pricing technique: sell as much as it can at a price of $40 then decrease the price to $25 and sell as much as it can. How many units in total is it going to sell under this scheme? Answer selection: (15,135,75,100,60)How much profit is the firm going to make under this scheme? Answer selection: ($1975,2010,1860,1875, 2025)

P = 100 – QWhenP = 40Q = 60Therefore at $40, the firm sells 60 unitsWhen P falls to $25P = 25Q = 75Therefore at $25, the firm sells (75 – 60) = 15 unitsProfit = (40×60) + (25×15) –…

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