Problem 1. In the given diagram, we show one of Jane’s indifference curves and her budget line.
a. If the price of good X is $100, what is her income?
b. What is the equation for her budget line?
c. What is the slope of the budget line?
d. What is the price of good Y?
e. What is her marginal rate of substitution in equilibrium?
Problem 2. The Johnson Robot Company's marketing officials report to the company's CEO that the demand curve for the company's robots in 2004 is:
P= 3,000 - 40Q
Where p is the price of a robot and Q is the number sold per month.
a. Derive the marginal revenue curve for the firm
b. At what prices is the demand for the firm's product price elastic?
c. If the firm wants to maximize its dollar sales volume, what price should it charge?