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    Managerial Economics: Calculating Maximum Profit and Revenue

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    A monopolist's demand function is given by
    P = 80-3Q
    (with MR = 80-6Q).

    Its total cost function is
    TC = 20Q + 200
    (with MC = 20).

    (i) Using algebra determine the profit maximizing output, price and optimal profit for the firm.

    (ii) Suppose that instead of maximizing profit, the firm wants to maximize total revenue. Using algebra determine the optimal output, price, profit and revenue for the firm.

    © BrainMass Inc. brainmass.com October 10, 2019, 2:19 am ad1c9bdddf
    https://brainmass.com/economics/output-and-costs/managerial-economics-calculating-maximum-profit-revenue-372146

    Solution Preview

    (i) Using algebra determine the profit maximizing output, price and optimal profit for the firm.

    A monopolist sets its output level such that MR=MC to maximize its profits.
    On equating MR=MC, we ...

    Solution Summary

    This solution describes the steps to calculate profit and revenue maximizing output level. It also calculates maximum profit and revenue.

    $2.19