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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 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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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 ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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