Total Cost= 30+5Q+4Q^2, Where Q represents output.
Suppose that competition forces this firm to charge the mkt. equilibrium price, which is $30. If this firm is a profit maximizer, how many units of output will it produce?
2007-03-01 07:53:58 · 2 answers · asked by tiner130 2 in Social Science ➔ Economics
To solve, you need to employ some calculus.
Marginal revenue will be 30.
Marginal cost is the first derivative of total cost.
This comes to 5+8Q. Thus, it will set Marginal cost at 30 and solve. This gives Q of 3.125, but you can't sell .125 of a unit, so the answer would be 3.
2007-03-01 08:01:02 · answer #1 · answered by theeconomicsguy 5 · 0⤊ 1⤋
The above method is correct, but the correct answer is indeed 3.125.
Goods are infinitely divisible - econ 101. You get an F, econguy.
2007-03-01 10:11:28 · answer #2 · answered by a_liberal_economist 3 · 0⤊ 0⤋