Purchase Solution

# Finding optimal output level

Not what you're looking for?

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?

##### 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!"

##### Free BrainMass Quizzes

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.