Esperanza Aquile is planning to create a driving school. She has two mainoptions: First option: To locate the school in Madrid where the demandfunction is Q = 50+ 100P+30P2 Second option: to launch the school inBarceola with a demand function: Q = 15000-90P2. Variable costs: 15euros Fixed costs: 10000 euros Fixed costs and Variable costs are thesame for every city. Using this information please calculate profits andrecommend where Esperanza should locate her school. There's a need touse a profit equation: Profit= Price*Quantity + Variable Cost* Quantity -Fixed Costs. Here we should have a profit funcion. Then there's need toderivate the function with respect to P and then check it if the price isminimum or maximum.

same for every city. Using this information please calculate profits and recommend where Esperanza should locate her school. There's a need to use a profit equation: Profit = Price*Quantity + Variable Cost*Quantity - Fixed Costs. Here we should have a profit funcion. Then there's need to derivate the function with respect to P and then check it if the price is minimum or maximum.

same for every city. Using this information please calculate profits and recommend where Esperanza should locate her school. There's a need to use a profit equation: Profit = PriceQuantity + Variable CostQuantity - Fixed Costs. Here we should have a profit funcion. Then there's need to derivate the function with respect to P and then check it if the price is minimum or maximum.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.2P

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