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Demand and Supply: Determine Price, Quantity, & Profit

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Use demand/supply to analyze how a company determines price, quantity, and profit.

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How does a company determines price, quantity and profit? The Solution explains how a company uses supply and demand.

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In perfect competition, you are unable to set prices, prices are set across the industry. Price would then be = Marginal Cost. A company would produce the quantity that corresponds to this point (where the lines intersect). See attached graph where this is labeled Q1. Price is P1. Profit is equal to ...

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  • MBA, Merage School of Business, Univ of Cal, Irvine
  • BA, Univ of Cal, Irvine
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