The Zinger Company: Total Profit at Optimal Level
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The Zinger Company manufactures and sells a line of sewing machines. Demand per period (Q) for a particular model is given by the following relationship:
Q = 400 - .5P
where P is price. Total costs (including a "normal" return to the owners) of producing Q units per period are:
TC = 20,000 + 50Q + 3Q2. What are total profits at the optimum level of output for Zinger Company?
a. $81,250
b. $812.50
c. $8,125
d. $812,500
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Q = 400-0.5P, rearranging this equation in terms of Q we get
P = 800 - 2Q
TR = P*Q
TR = 800Q - 2Q2
Marginal revenue is the first ...
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