Explore BrainMass
Share

Explore BrainMass

    Maximizing Profits - Demand and Marginal Revenue Curves

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

    The (inverse) demand curve for the services of Oakland Pest Control Co. (OPCC) is given by

    P = $1000 - 2Q, where P is in dollars, and Q is residences/month.

    The cost equation is given by C = 2000 + 30Q.

    a. Sketch and label OPCC's demand and marginal revenue curves, and determine the maximum revenue it can make.

    b. What are OPCC's profit-maximizing price and output levels?

    c. How much profit does OPCC make if it services 100 residences per month?

    © BrainMass Inc. brainmass.com October 10, 2019, 6:00 am ad1c9bdddf
    https://brainmass.com/economics/output-and-costs/maximizing-profits-demand-and-marginal-revenue-curves-524509

    Solution Preview

    a.

    Demand curve:
    P = 1000 - 2Q

    Total Revenue (TR) = PQ
    TR = (1000 - 2Q)Q
    TR = 1000Q - 2Q^2

    MR is the derivative of TR:
    MR = 1000 - 4Q

    See the attached file for the ...

    Solution Summary

    This solution shows how to find the Quantity and Price that maximizes the profits of Oakland Pest Control when the firm's Demand Curve and Total Cost Curve are known.

    $2.19