MGT 420 UC San Diego Marginal and Demand Analysis Questions There are two major questions with three (a,b,c) sub questions for each. These two questions ar

MGT 420 UC San Diego Marginal and Demand Analysis Questions There are two major questions with three (a,b,c) sub questions for each. These two questions are regarding marginal analysis and demand analysis. Must use graph to support the answer. (Please show all work and remember to label all graphs!)
1) Marginal Analysis
You are the manager of GetMoney Inc. and you produce cardboard boxes.
Suppose that you hired a consultant for your company to estimate the
demand for your cardboard boxes. You collect data on the price and quantity
of boxes sold and send it to your consultant, who then estimates the inverse
demand equation as P = 14 – (1.5)*Q. Please also assume that you have a
fixed cost of $2 and that the variable cost as estimated by your consultant is
V(Q) = 4Q + 2.
a) What is the quantity that maximizes profits based upon the above
information? What are the corresponding maximum profits that you can
earn? (Please use graphs to support your answer.)
b) At the quantity that maximizes net benefit, are marginal revenues
positive, negative, or zero? At this quantity, would you recommend
increasing production in order to increase revenues? Why or why not.
(Please use graphs to support your answer).
c) Are marginal benefits equal to zero at this quantity? Why or why not?
2) Supply and Demand
Suppose that your analyst estimates the demand equation for good X as
given below:
=12− −2 +1 +
Good X sells for $1 per unit, good Y sells for $2 per unit, good Z sells for $1
per unit, and consumer income is $4.
a.
Using the information provided by your analyst, please determine the
demand equation. (Please use graphs to support your answer).
b.
Please calculate the own price elasticity of demand for good X. Is the
demand for good X elastic, inelastic, or unit elastic? (Please indicate
where on your graph of the demand equation from part a, your
calculation of own-price elasticity lies.)
c.
If I increase the price of good X by 0.13%, what happens to revenues?
(Please use graphs to support your answer.)

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