Purchase Solution

Finding optimal output level

Not what you're looking for?

Ask Custom Question

Firm PQR produces a product 'Alpha' under perfect competition market conditions. The cost function for the firm is:
TC = 1500 + 200Q + Q^2

The market supply and demand equations for the product 'Alpha' in the perfect competition market are:
QS = 40,000 + 60 P
QD = 80,000- 40 P

Based on the information given above, calculate:

1. The profit maximizing output for PQR.
2. The economic profits earned by PQR.
3. Is the industry for product 'Alpha' in equilibrium?

Purchase this Solution

Solution Summary

Solution describes the steps to find out profit maximizing output and economic profits of a perfectly competitive firm.

Solution Preview

1. The profit maximizing output for PQR.

Qs=40000+60P
QD=80000-40P
For equilibrium, Put Qs=QD
40000+60P=80000-40P
100P=40000
P=400

Each firm is a price taker in perfectly competitive environment. So, PQR will also sell its output at ...

Solution provided by:
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution


Free BrainMass Quizzes
Solving quadratic inequalities

This quiz test you on how well you are familiar with solving quadratic inequalities.

Multiplying Complex Numbers

This is a short quiz to check your understanding of multiplication of complex numbers in rectangular form.

Probability Quiz

Some questions on probability

Geometry - Real Life Application Problems

Understanding of how geometry applies to in real-world contexts

Exponential Expressions

In this quiz, you will have a chance to practice basic terminology of exponential expressions and how to evaluate them.