You have a slight(!) error:
R = 100/√q * q = 100√q
Profit = R-2q-1200
= 100√q - 2q - 1200
maximum profit where dP/dq = 0
50/√q - 2 = 0
50 = 2√q
q = 625
since P = R-C,
dP/dq = 0 when dR/dq = dC/dq
The price is 100*25 = 2500
For xyz manufacturing the fixed costs are $1200, material and labor costs combined are $2 per unit, and the demand equation is:
p=100/√q
What level of output will maximize profit? Show this occurs when marginal revenue equals marginal cost. What is the price at the profit maximization?
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I understand R=p*q
R=100/√q * q =100/√q
I think
Profit = R-2q-1200
Then I don't know what to do.. Can anyone help?
1 answer
1 answer