Explore BrainMass

Profit Maximization

The Demand Function for a product can be as Q=400-2P. We would have a fixed cost for this product as 200 and our variable costs are 0.5 per unit. Please let me know the equation for the profit. When is profit maximized? What is the maximum profit?

Solution Preview

First you need to find the inverse demand function. You are given the demand function Q = 400-2P. We can convert this like this:
2P = 400 - Q
P = 200 -Q/2
Now you have the price as a function of the ...

Solution Summary

Profit maximization given demand function and costs of production.