maximum amount of profit
Not what you're looking for?
The Ali Baba Co., is the only supplier of a particular type of Oriental carpet. The estimated demand for its carpets is
Q= 112,000 - 500P + 5M
Where Q = number of carpets, P = price of carpets (dollars per unit), and M = consumers' income per capita. The estimate average variable cost function for Ali Baba's carpets is
AVC = 200 - 0.012Q + 0.000002Q2
Consumers' income per capita is expected to be $20,000 and total fixed cost is $100,000.
a. How many carpets should the firm produce in order to maximize profit?
b. What is the profit-maximizing price of carpets?
c. What is the maximum amount of profit that the firm can earn selling carpets?
d. Answer parts a through c if consumers' income per capita is expected to be $30,000 instead.
Purchase this Solution
Solution Summary
The maximum amount of profit is determined.
Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.