Purchase Solution

calculate demand and price for two different demand functions that have the same cost function

Not what you're looking for?

Ask Custom Question

I need to know how to calculate demand and price for two different demand functions that have the same cost function.
P1 = 20 - .0125Q1
P2 = 40 - .025Q2

ATC = MC = 3.00.

How do I calculate the price and quantity for each? How does ATC/MC factor into the price/quantity estimate?

What is the economic profit for each?

Thanks

Purchase this Solution
Solution Summary

The economic profit for each is given. The different demand functions that have the same cost function is analyzed.

Solution Preview

For the first demand, the firm's total revenue is
TR = Q1*P1 = (20 - .0125Q1)*Q1 = 20 Q1 - .0125Q1^2
Then the Marginal revenue is
MR1 = dTR / dQ1 = 20 - .025Q1
we know that ...

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

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.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

View More Free Quizzes
Related BrainMass Solutions

  • 5 Problems

    (a) Find Bob's marginal revenue and marginal cost functions and plot them on the same graph, along with the demand function. (b) Assuming Bob is a profit-maximizing monopolist, how many capsules will Bob produce? What price will he charge?

  • Calculating Profit Maximization & Cost Functions

    140686 Calculating Profit Maximization & Cost Functions Suppose there are three firms with the same individual demand function. This function is Q = 1,000 - 40P. Suppose each firm has a different cost function.

  • Maximizing profit by charging different prices in NY and LA

    Given the demand functions that a firm faces in the New York and Los Angeles markets, this firm shows how to calculate the firm's maximum profit when it charges the same price in both markets, and when it charges different prices in each market.

  • price-output solution

    b) Calculate the marginal revenue functions facing Chillman. Add these to your graph from Part (a) c) Chillman's total cost function is TC1 = 500 + 15Q + .5Q2 Calculate the marginal cost function.

  • Profit Maximization

    The firm has calculated the demand functions for each market as follows: Market A p = 15 -Q Market B p = 11 -Q The company estimates its total cost function to be: TC = 4Q Calculate: a.

  • Mathematical Economics-Price and output determination

    Based on the estimates provided by a consultant, you know that the relevant demand and cost functions for this SD card are Q = 120 - 2P; C = 20 + 2.5Q2. What are the levels of quantity and price when you are maximizing profits?

  • Price Discrimination calculations

    Thank you for using BrainMass. Price Discrimination calculations based on total quantity demanded and demand functions for two groups

  • Economics (Theoretical)

    The cost functions for the two plants respectively are: Csub1= 25+2Qsub1squared and Csub2= 20+Qsub2Squared 1. What is the marginal revenue and marginal cost functions? 2.

  • Determining Profit Maximizing Price

    Now demand function is same for all the three firms. So, the price to be charged to maximize profits will depend upon their MC curve. MC for first two firms is same, So, these firms will charge the same price.

View More Related Solutions