Market Researchers at the Lawrence Company estimate that the demand function for a product is: Q=75P^2*I^(-4) Q is quantity demanded, P is Price, and I is Income. Marginal cost is estimated to be $15.
a). They have their product priced at $30. Is this optimal? why or why not.
b). What would you recommend their optimal price to be?
c). How would you classify the product in terms of it's income elasticity?