Explore BrainMass

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

Not what you're looking for? Search our solutions OR ask your own Custom question.

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

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

https://brainmass.com/economics/microeconomics/different-demand-functions-cost-function-31364

#### 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 ...

#### Solution Summary

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

\$2.49