Presented by
Tiffany Lau
Xiang Zhang
Total Cost Regression
Total Revenue Regression
MC > MR
MC < MR
Evaluation
•
The pricing policy of the firm is not sound:
at initial selling quantity of 2500, the
marginal cost is $9.94, while marginal
revenue is only $9.80, or MC > MR
•
MC =MR when Q= 2558.333
Increases in Demand
 At
a quantity of 2750 (=2500*1.1), we
have MR > MC, which makes the
firm’s pricing policy apt
Sensitivity Analysis
The regression function of TC does not change. After
decreasing Q, the coefficient of the selling quantity remains
the same. Consequently, the Q that maximizes the firm’s
profit stays at 2558.333.