A firm in an oligopolistic industry has the following demand and total cost equations
P = 600 - 20Q
TC = 700 + 160Q + 15Q squared
Calculate:
A. Quantity at which profit is maximized
B. Maximum profit
C. Quantity at which revenue is maximized
D.Maximum revenue
E. Maximum quantity at which profit will be at least $850
F. Maximum revenue at which profit will be at least $580
Solution Preview
A firm in an oligopolistic industry has the following demand and total cost equations
P = 600 - 20Q
TC = 700 + 160Q + 15Q squared
Calculate:
A. Quantity at which profit is maximized
The demand curve is P = 600 - 20Q
then marginal revenue is MR = 600 - 40Q
Marginal cost is MC = dTC / dQ = 160 + 30Q
The first order condition for profit maximization is MR = MC, i.e.,
600 - 40Q = 160 + 30Q
70Q = ...
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