Calculating MC and MR for given functions
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Use the following equation to demonstrate why a firm producing at the output level where MR=MC will also be able to maximize its total profit (i.e. be at the point where marginal profit is equal to zero).
P=170-5Q
TC=40+50Q+5Q^2
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Solution Summary
Solution explains the steps in showing that output level at MR=MC is a condition for profit maximization.
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Solution :
Total Revenue = P*Q = 170Q-5Q^2
TC = 40+50Q+5Q^2
Profit = Total Revenue - Total Cost
d (Profit)/dQ = d(Total Revenue)/dQ - d(Total Cost)/dQ
We know MC = ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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