Define Q to be the level of output produced and sold, and assume that the firm’s cost function is given by the relationship TC = 20 + 5Q + Q2 Furthermore, assume that the demand for the output of the firm is a function of price P given by the relationship Q = 25 - P a. Define total profit as the difference between total revenue and total cost, and express in terms of Q the total profit function for the firm. (Note: Total revenue equals price per unit times the number of units sold.) b. Determine the output level where total profits are maximized.
Define Q to be the level of output produced and sold, and assume that the firm’s cost function is given by the relationship TC = 20 + 5Q + Q2 Furthermore, assume that the demand for the output of the firm is a function of price P given by the relationship Q = 25 - P a. Define total profit as the difference between total revenue and total cost, and express in terms of Q the total profit function for the firm. (Note: Total revenue equals price per unit times the number of units sold.) b. Determine the output level where total profits are maximized.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Define Q to be the level of output produced and sold, and assume that the firm’s cost function is given by the relationship
TC = 20 + 5Q + Q2
Furthermore, assume that the demand for the output of the firm is a function of price P given by the relationship
Q = 25 - P
a. Define total profit as the difference between total revenue and total cost, and express in terms of Q the total profit function for the firm. (Note: Total revenue equals price per unit times the number of units sold.)
b. Determine the output level where total profits are maximized.
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