Demand function and total cost function
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A firm has a demand function and a total cost function as follows: P=$5,000-$3Q
:TC = $3000,000 + $1,000Q + $2Q^2
Calculate the optimal output and price. Assuming:
The firm is maximizing total profit.
The firm is maximizing total revenue.
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Solution Summary
The Solution provides optimal output and price with the given assumptions.
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(a) Profit = TR - TC = PQ - (3000000 + 1000Q + 2Q^2) = (5000 - 3Q)Q - (3000000 + 1000Q + 2Q^2)
= 5000Q - 3Q^2 - ...
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