Question

A perfectly competitive firm can sell it's product for $240. The cost of producing the product is $1500 for fixed costs and 30 + 35q2 for variable costs. What is the profit maximizing quantity? What will be the profit for this product? 5. A monopolist faces the following demand and cost functions: Q = 900 - 3P TC = 250 + 100Q + 2Q? The nrofit maximizing price and quantity. What is the profit?

Answer 1

(4) I perfectly competitive from p=240 FC = 1500 VC= 30Q +35Q² TC = FC AVC - soo +30 Q. MC=dTC = 0 + 30 (1) +708 = 30+70a Profit-maximizing condition p=MC 240 30 +72 72 =240-30 a = 210 7 a = 30 units. TC = 1500+30 (30) +0.35 (30)? = 1500 +900+ 315 = 2715 TR = P.Q = 240x30 = 7200 profit - TR-TC = 7200 - 2715 - $4,uss

Mon Monopoly. a = co -3° 30 = 90o - в Р= 3eo — TR = p.Q

TR = (300-aga TR = 3002 - 2² MR = 2TR dQ = 300 (1 - 20 MR = 300 - 20 3 TC = 250 H100 +?p? MC=dTC da = o tloo(1) + ua MC = 100+uQ Condition Bofit - maximizing HP = мс 300 - 2 = 100+ use 300-100 - na +20

la =200 2 20 = 200 Q = 200 Q =100 units. substituting a into price equation P = 300-100 3 P = 300 - 33.33 P=266.67 TC = 250 tloo (100)+ = 250 + 10000 + 6,666.67 = 16,916.67 TR = P.Q = 266667x100 = 26,667.67 Profit - TR -TC - 26,667.67 – 16,916.67 = $9,751