Call Us demand function is Q=410-P and MC=10+5Q. Given that TFC=$0
a)derive an equation for TC
b)calculate the profit maximizing level
2 answers
Good luck
Q = 410 – P and MC = 10 +5Q
a) TC = FC + TVC (FC = $0, given)
To derive TC (or TVC) from MC, integrate
TC = 10/1Q + 5/2Q1 +1 = 10Q + 2.5Q2
b) Profit is maximized when MR = MC
P = 410/1 – Q/1 = 410 – Q
MR = 410 – (2)Q = 410 – 2Q
MC = 10 + 5Q
410 – 2Q = 10 + 5Q
Q = 400/7 = 57.14 (profit maximizing quantity)
P = 410 – Q = 410 – (57.14) = $352.86 (profit maximizing price).
a) TC = FC + TVC (FC = $0, given)
To derive TC (or TVC) from MC, integrate
TC = 10/1Q + 5/2Q1 +1 = 10Q + 2.5Q2
b) Profit is maximized when MR = MC
P = 410/1 – Q/1 = 410 – Q
MR = 410 – (2)Q = 410 – 2Q
MC = 10 + 5Q
410 – 2Q = 10 + 5Q
Q = 400/7 = 57.14 (profit maximizing quantity)
P = 410 – Q = 410 – (57.14) = $352.86 (profit maximizing price).
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