Define Q to be the level of output produced and sold, and assume that the firm's cost function is given by the relationship:

TC = 20 + 5Q + Q^2 (Q is squared)

Furthermore, assume that the demand for the output of the firm is a function of price P given by the relationship:

Q = 25 - P

1. Define total profit as the difference between total revenue and total cost, and express terms of Q the total profit function for the firm. (Note: Total revenue equals price per unit times the number of units sold.)

2. Determine the output level where total profits are maximized.

3. Calculate total profits and selling price at the profit-maximizing output level.

Solution Preview

Update: If the fixed cost increases from $20 to $25 in the above equation, it will not change the profit maximizing output quantity, but will reduce the total profit by $5 (so total profit will now be $25]

You can put in 25 in the cost equation and follow the steps I took. Your answers should be:

Q = 5
P = 20
Total Profit = $25

Define Q to be the level ...

Solution Summary

Calculate total profits and selling price at the profit-maximizing output level.

...SELLING PRICE LABOR USED QUANTITY MADE TOTAL REVENUE METAL ... E) At what quantity wil teh profits or losses ...Profit = (USP)(Quanity) - [(UVC)(Quantity) +Fixed Costs ...

...total profit to the number of units sold - P(X). c.Find the number of units to be sold to achieve maximum profit and find the maximum profit. d.What price per ...

... What will be your total profits? ...Total Revenue for Jerseys sold in Los Angeles is TR(LA)=PLA*QLA ... For profit maximization, put MR(LA)=MC(LA) 60-2QLA=2QLA+2QB ie ...

...Total BEP (Units) 272,603 BEP (Sales Dollars) $ 394,317.83 Targeted profit points 541,493 ... 5,500 Volume of special order 60,000 Selling price of special ...

... 30,000 / 21.33% Sales = $140,647 Therefore profits = 47.06% x ... Variable cost = 30,000, while Total Revenue = 140,647. ... of sales needed for the target profit to be ...

... Cost-volume-profit (CVP) analysis is a key step in ... of activity, the unit variable costs, the total fixed costs ... used to predict the impact on profits of changes ...

... DC's expected profit, manufacturer's profit, and the total supply chain profit as a ... that would coordinate this supply chain, and compare profits of the ...

... increases with high sales volume and vice versa and also total cost increase with ... NP = Px - (a + bx) where NP is the net profit, P is selling price, x is ...

...Total contribution margin = Fixed cost + Operating profit Total contribution margin ... Boston Cell Tech Inc Units sold 9400 (a) Selling price per unit 90 ...

... Variable Fixed Total. Sales Cost of Goods Sold (Expense) Gross Margin or Gross Profit Selling & Admin (or GS&A or Operating expenses) Net income (Operating ...