Asked by Dinish
A monopolist faces the price equation P = 1,000 – 0.5Q, and cost is given as TC = 400 + 100Q +2.5Q^2.Determine the profit at the revenue maximizing level and the profit maximizing level. Compare the answers above and comment on the appropriate goal of the firm.
Answers
Answered by
economyst
Always always always, maximize where MC=MR
Total revenue is P*Q = 1000Q- 0.5Q^2. MR is the first derivative of TR. So, MR=1000 - Q
MC is the first derivative of TC. So, MC=100 + 5Q
MC=MR is 100+5Q = 1000-Q. solve for Q. then plug the optimized Q into TC and TR to derive the profit.
Total revenue is P*Q = 1000Q- 0.5Q^2. MR is the first derivative of TR. So, MR=1000 - Q
MC is the first derivative of TC. So, MC=100 + 5Q
MC=MR is 100+5Q = 1000-Q. solve for Q. then plug the optimized Q into TC and TR to derive the profit.
There are no AI answers yet. The ability to request AI answers is coming soon!
Submit Your Answer
We prioritize human answers over AI answers.
If you are human, and you can answer this question, please submit your answer.