output, price, total revenue, and total profit

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Please answer A, B & C.
Dyna-Rubber, Inc. man manufactures a high-performance tire called Sport 70. Fixed development cost for the current year is $600,000. Marginal costs for manufacturing and distribution are $63 per tire. Based on recent sales experience, the estimated demand curve and marginal revenue relations for Sports 70 are:
P = $130 - $0.000125Q
MR = $130 - 0.00025Q

A. Calculate output, price, total revenue, and total profit at the revenue maximizing
activity level (present your answer with relevant diagrams too)

B. Calculate output, price, total revenue, and total profit at profit maximizing activity level
(again also with diagrams).

C. Compare and discuss our answers in part A and B.

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Solution Preview

Dyna-Rubber, Inc. man manufactures a high-performance tire called Sport 70. Fixed development cost for the current year is $600,000. Marginal costs for manufacturing and distribution are $63 per tire. Based on recent sales experience, the estimated demand curve and marginal revenue relations for Sports 70 are:
P = $130 - $0.000125Q
MR = $130 - 0.00025Q

A. Calculate output, price, total revenue, and total profit at the revenue maximizing
activity level ...

Solution Summary

This job determines output, price, total revenue, and total profit.

$2.49