Compute the Maximum Profit When the Demand Function Is $p ( x ) = x ^ { 2 } - 3 x + 2$

question 67

Short Answer

Compute the maximum profit when the demand function is $p ( x ) = x ^ { 2 } - 3 x + 2$ and the total cost function is $C ( x ) = \frac { 2 x ^ { 3 } } { 3 } - \frac { 1 } { 2 } x ^ { 2 } - 2 x$ Enter just a reduced fraction of form $\frac { a } { b }$ .

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Definitions:

Rational Expectations

The theory that people optimally use all the information they have, including information about government policies, when forecasting the future.

Sacrifice Ratio

A measure of the economic cost associated with reducing inflation, often calculated as the percentage loss in output per percentage point decrease in inflation.

Inflation Expectations

The anticipation by consumers and businesses of the rate at which prices will rise in the future.

Phillips Curve

An economic theory suggesting an inverse relationship between the rate of inflation and the rate of unemployment within an economy.