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Determining optimal production level

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If total cost function and demand function are as under,

TC = 10,000 + 100Q + 0.02Q^2
Qd =20,000 - 100 P

how do I determine the short-run profit maximizing price and quantity? How do I determine the maximum profit accruable to the firm ?

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Solution Summary

Solution depicts the steps to calculate profit maximizing output and price level. It also calculates maximum profit.

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Solution:

TC=10000+100Q+0.02Q^2

Marginal cost can be found by differentiating TC with respect to Q.
MC=d(TC)/dQ=100+0.04Q

Now Q=20000-100P
On rearranging, we ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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