Explore BrainMass

Explore BrainMass

    Microeconomics - Profit maximization, elasticity, marginal

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The Alvin Corporation is the only producer of a particular type of laser. The demand curve for its product is:
    Qd = 8,300 -2.1P
    And its total cost function is:
    TC = 2,200 + 480Q +20Q²

    Where P is price (in dollars), TC is total cost (in dollars), and Q is monthly output
    a. To maximize profit, how many lasers should the firm produce and sell per month?
    b. If this number were produced and sold, what would be the firm's monthly profit?
    c. Is demand elastic, inelastic or unit elastic at the profit maximizing price - quantity
    d. What is the excess of price over the marginal cost at the profit maximizing price-
    quantity combination?

    © BrainMass Inc. brainmass.com October 9, 2019, 10:52 pm ad1c9bdddf

    Solution Preview

    (a) Profit, PR = Revenue - Cost = QP - TC = [Q(8300 - Q)/2.1] - (2200 + 480Q + 20Q^2)

    = 3952.38Q - 0.4762Q^2 - 2200 - 480Q - 20Q^2 = -20.4762Q^2 + 3472.38Q - ...

    Solution Summary

    A Complete, Neat and Step-by-step Solution is provided.