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# Profit Maximizing

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Use the following paragraph to analyze the 3 questions. I just don't get this one! Please show answer and reasoning:

Jones Inc. is a monopolist producing and selling a product whose demand is P= 250-6Q. The total cost of production is TC=100+34 Q+3 Q2, and the marginal cost of production is MC= 34+6Q.

In order to maximize profits, Jones Inc. should produce
A. Q=8.
B. Q=12.
C. Q=18.
D. None of the above.

The profit-maximizing uniform price per unit for Jones Inc. is
A. P=\$140.
B. P=\$106.
C. P=\$178.
D. None of the above.

If Jones were able to practice first degree price discrimination, then

A. Its total cost would be \$1684.
B. It would produce and sell more than under uniform pricing.
C. The last unit would be sold at a price equal to its marginal cost of production.
D. All of the above.

https://brainmass.com/economics/production/profit-maximizing-208259

#### Solution Preview

Jones Inc. is a monopolist producing and selling a product whose demand is P= 250-6Q. The total cost of production is TC=100+34 Q+3 Q2, and the marginal cost of production is MC= 34+6Q.

In order to maximize profits, Jones Inc. should produce
A. Q=8.
B. Q=12.
C. Q=18.
D. None of the above.

Profit = (250 - 6Q) Q - ...

#### Solution Summary

Jones Inc. is a monopolist producing and selling a product whose demand is P= 250-6Q. The total cost of production is TC=100+34 Q+3 Q2, and the marginal cost of production is MC= 34+6Q.

In order to maximize profits, Jones Inc. should produce how many units?

\$2.19
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## Calculating the Profit Maximizing Price Level

You are asked to help in setting the subscription rates of a monthly magazine. As expected, the major component of cost is fixed or sunk; so we ignore it in what follows. Variable cost including printing, shipping, and mailing comes to \$30 per year per subscriber. The publisher has an extensive data set suggesting that annual magazine subscription demand is: D = 100 - p. Here p is the price of an annual subscription.

SHOW ALL EXCEL FORMULAS AND INPUTS FOR SOLVER (QUESTION #3)

1) If the publisher sets p = 47 what will her profit be?

2) Write down an algebraic expression for total profit to the publisher as a function of p.

3) Use SOLVER to compute the profit maximizing choice of p.

4) Suppose the magazine has another source of revenue: advertising. Consumers do not care about the amount of advertising contained in each issue, but advertisers care about the number of subscribers. For every subscription purchased, the magazine gets \$20 in advertising revenue. Taking into account the revenue from advertising, should the publisher lower or raise its annual subscription price p? What should the new profit maximizing level of p be?

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