Calculating maximum profit made by a coal producer
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A coal producer has the following total cost function:
TC=$187,500+$5Q+$0.0003Q^2
where Q is tons of coal produced per month. Calculate the firm's maximum profit if coal price is stable at $20/ton.
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Solution depicts the steps to calculate maximum profit made by a coal producer in the given case.
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Solution:
TC=187500+5Q+0.0003Q^2
Marginal Cost=MC=d(TC)/dQ=5+0.0006Q
Since price is stable at $20/ton,
Marginal Revenue (MR)=Price=$20
A ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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