1. Q = 8.5 – 0.05P, where Q is measured in tons.
DRQ #2: September 15, 2009
Hill’s Pet Nutrition, Inc. is an international manufacturer of pet food. The demand for pet food is given by:
Q = 8.5 – 0.05P, where Q is measured in tons.
(2pts) (a) What is the inverse demand function? P=170-20Q
(2pts) (b) Set up the revenue function in terms of Q. PQ = 170Q-20Q2
(2pts) (c) Suppose that TC = Q, where TC stands for total cost. Set up the profit function in terms of Q. π = 170Q - 20Q Q
π =132Q - 20Q
(2pts) (d) Find the value of Q that maximizes profit. dπ/dQ = Q = 0
Q= 3.3
(1pt) (e) What price should Hill’s Pet Nutrition, Inc. charge per ton of pet food?($/ton) $104
(1pt) (f) Calculate the maximum profit obtainable for Hill’s Pet Nutrition, Inc.
TR = TC = $117.80