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Determining Profit Maximizing output level

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The weekly demand for computers produced by College Computers is given by
Q= 1,000 - P

and the weekly cost of producing computers is
(C)Q= 2,000 + Q^2.

If other firms in the industry sell PCS at $600 what price and quantity of computers should you produce to maximize your firm's profits?

What long run adjustments should you anticipate? Explain.

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Solution:

C(Q)=2000+Q^2
Marginal cost=dC(Q)/dQ=2Q

Since there are similar firms in the markets, It cannot have monopoly as product is not differentiable. Firm will behave ...

Solution Summary

Solution describes the steps for determining profit maximizing output level for a given firm. It also explains anticipated long run adjustments.

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