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Profit maximizing output

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Suppose a firm is operating under a competitive market conditions and the going price for its product is $260. If the firm's short run Total Variable Cost (TVC) function is

TVC = 80Q - 6Q2 + 0.2Q3
Total fixed is cost = $1000

a. What is the firm's profit maximizing output?

b. How much profit will the firm make?

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Solution Summary

The expert determines the profit maximizing output. The competitive market conditions are examined.

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Profit is maximized when marginal cost is the same as marginal revenue. We are given the total cost function, which we can differentiate to find marginal revenue:
MC= 80 - ...

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