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Revenue and Profit Maximization Under Oligopoly

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Revenue and Profit Maximization Under Oligopoly
An oligopolist, the Bramwell Corporation has estimated its demand function and total cost functions to be as follows:

Q = 25 - 0.05P

TC = 700 + 200Q

Answer the following questions either by developing demand and cost schedules, using quantities from 1 to 14, but preferably by algebraically solving the equations.

What will be the price and quantity if Bramwell wants to

1) Maximize profit?

2) Maximize revenue?

3) Determine the maximum revenue and the maximum profit for the oligopolist

NB: You can use excel to do the schedule, but as a supplement (attached alongside your response), this exercise needs be calculated out here algebraically here in addition to a spreadsheet calculation. You can also use the "insert table" feature within this window.

Solution Summary

Revenue and Profit Maximization Under Oligopoly

Solution Preview

First, we know that a firms revenue is profit = revenue - cost

revenue = quantity X price.

Q = 25 - 0.05P, which means P = 500 - 20Q

profit = quantity X price - cost ...

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