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# Calculating optimal output and profit

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Dot.com Products, Inc., offers storage containers for fine china on the Internet. The company is the low-cost retailer of these quilted boxes with fixed costs of \$480,000 per year, plus variable costs of \$30 for each box. Annual demand and marginal revenue relations for the company are:

P=\$70-\$0.0005Q

MR=dTR/dQ = \$70- \$0.001Q

A. Calculate the profit-maximizing activity level.
B. Calculate the company's optimal profit and return-on-sales levels.

https://brainmass.com/economics/price-levels/calculating-optimal-output-profit-example-problem-358369

#### Solution Preview

A. Calculate the profit-maximizing activity level.

Given MR=70-0.001Q

Variable cost per box=\$30
Fixed costs=\$480000
Variable cost per box=\$30

If Q is output level, then
Total Variable ...

#### Solution Summary

Solution depicts the steps to find out optimal activity level and profit at that level.

\$2.19