A consultancy firm, focusing on capacity building in Research
Methodology has a demand function 100 – 10Q – P = 0 and
cost per unit function as Q – 8 + 400/Q, where Q = number of
capacity building hours and P = fees charged per hour.
a. Determine the number of capacity building hours which maximizes
the company’s profit.
b. How much should the firm charge for the capacity building?
c. Find the total profit at the profit maximizing level of consultancy.
d. Using the own price elasticity of demand, Comment on the firm’s
pricing policy options.
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