# Lagrangian Multipliers

Fixed capital and labor expenses are $1.2 million per year.

Variable expenses average $2,000 per van conversion.

Q=1,000 - 0.1P where Q is the number of van conversions (output) and P is price.

Calculate the profit maximizing output, price and profit levels.

https://brainmass.com/economics/principles-of-mathematical-economics/lagrangian-multipliers-64453

#### Solution Preview

Fixed cost = 1,200,000

Unit Variable cost = 2000

So the cost function is TC = FC + VC = 1200,000 + 2000 Q

Then marginal cost = AVC = 2000

Since Demand is Q ...

#### Solution Summary

Calculate the profit maximizing output, price and profit levels.

$2.19