26 Jul WHAT ARE THE TWO PARTS OF THE PRICE?
s Association reports that annual sales of bakery goods last year rose 15% drive Show more The American Bakers Association reports that annual sales of bakery goods last year rose 15% driven by a 50% increase in the demand for bran muffins. Most of the increase was attributed to a report that diets rich in bran help prevent certain types of cancer. You are the manager of a bakery that produces and packages gourmet bran muffins and you currently sell bran muffins in packages of three. However as a result of a new report a typical consumers inverse demand for your bran muffins is now P = 3 .5Q. If your cost of producing bran muffins is C (Q) = Q and your MC = 1 determine the optimal number of bran muffins to sell in a single package. Draw the demand and cost curves. What are the two parts of the price? what is the optimal package price? Show less
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