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# Demand equation with many variables and finding Profit maximization

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 Voting Style: Open Point System: 7 Point Started: 2/27/2016 Category: Economics Updated: 2 years ago Status: Post Voting Period Viewed: 505 times Debate No: 87341
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 Pro This is not really an argument but a way of finding out how to maximize profits. Here is my problem. I have run a regression for a hypothetical business to find out its demand equation. I ran a linear relationship for the last 10 years. Quantity is a function of price, consumer disposable income, and population. Q = a + bP+ cI + d Pop where a is the intercept and b,c and d are the coefficients Q is the quantity demanded P is the price, I is the disposable income and Pop is the population After running the regression here is my demand equation Q = -125 + 7.31P + .0030I + .0003Pop Now I know that price does not shift the demand curve but Income and population shift it to the right. I also know that for profit maximization MR = MC. In this case MC = 2. How do I find the MR of the demand equation above. It would be a very simple calculation using calculus if Price was the only variable but that is not realistic or the case here. Does any one out there have any suggestions??Report this Argument Con This is no opinion, no facts : this is just a question.. Debates??? I will keep my points for later... I assume Round 1 is for acceptanceReport this Argument Pro I made a small error. The plus sign should be a minus sign for the price. Q = -125 - 7.31P + .0030I + .0003Pop. I believe that once the regression is run for say data for a ten year period, take the current values of the explanatory variables except for the price variable and solving the equation for the price, you will then get an equation like this P = a-bQ where "P" is the price and "Q" is the quantity. "a" is the P intercept and "b" is the slope. If you have a marginal cost of say "c" then the price that maximizes the demand equation is this P = a -[(a-c)/2]. In other words all you need to find price that maximizes profits is the P intercept (i.e. the price that demands a zero quantity) and the marginal cost and that is it. Do you agree or disagree with this argument. The equation P = a -[(a-c)/2] is derived by using calculus (MR = MC)Report this Argument Con Try googling your error. There are many websites which may help your matter dear friendReport this Argument Pro I have no other argument unless someone out there can challang my lat postReport this Argument Con OkayReport this Argument Pro pincivma forfeited this round. Con dukula forfeited this round. Pro pincivma forfeited this round. Con dukula forfeited this round.
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