An auto-service establishment has estimated its monthly costfunction as follows:
TC = 6000 + 10 Q
where Q is the number of cars it services each month and TCrepresents its total cost. The firm is targeting 35,000 net monthlyprofit servicing 2000 cars.
a. What price should the firm charge in order to realizethe targeted profit?
b. What would be its (cost-based) markup ratio?
b2. Now suppose the demand curve the firm faces is: Q = 3000 - 50P. Is the firm going to achieve its profit goal? Explain.
c. If your answer to (b) is \"no\", what would be the optimal markupratio for this firm?
