Explore BrainMass
Share

Managerial Economics: Calculating Maximum Profit and Revenue

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

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 March 21, 2019, 9:21 pm 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