Suppose a firm’s inverse demand curve is given by P = 120 – .5Q and its cost

| February 25, 2017

Question
Suppose a firm’s inverse demand curve is given by P = 120 – .5Q and its cost equation is C = 420 + 60Q + Q 2.

Find the firm’s optimal quantity, price, and profit (1) by using the profit and marginal profit equations and (2) by setting MR equal to MC. Also provide a graph of MR and MC.

Suppose instead that the firm can sell any and all of its output at the fixed market price P = 120. Find the firm’s optimal output.

Aug 20 2015 02:53 PM
Solutions:

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