Suppose that a firm faces the demand curve, P = 100 - 3Q, where P denotes price in dollars and Q denotes total unit sales. The cost equation is TC = 200 + 22Q.
A. Determine the firmâs profit-maximizing output and price.
B. Suppose that there is a change in the production process so that the cost equation becomes TC = 80 + 12Q + Q2. Determine the resulting effect on the firmâs output and price.
C. Compared to the two different cost structures in part a and b, what has happened to the Total cost and Marginal cost at the original quantity found in part a? Also, comment on your findings here as it relates to the quantity values computed in parts a and b.
D. Suppose that the firm sells in a competitive market and faces the fixed price: P = $48. State the Total Revenue (TR) and Marginal Revenue (MR) functions, and using the cost function in part b, find the firmâs new optimal quantity.
Suppose that a firm faces the demand curve, P = 100 - 3Q, where P denotes price in dollars and Q denotes total unit sales. The cost equation is TC = 200 + 22Q.
A. Determine the firmâs profit-maximizing output and price.
B. Suppose that there is a change in the production process so that the cost equation becomes TC = 80 + 12Q + Q2. Determine the resulting effect on the firmâs output and price.
C. Compared to the two different cost structures in part a and b, what has happened to the Total cost and Marginal cost at the original quantity found in part a? Also, comment on your findings here as it relates to the quantity values computed in parts a and b.
D. Suppose that the firm sells in a competitive market and faces the fixed price: P = $48. State the Total Revenue (TR) and Marginal Revenue (MR) functions, and using the cost function in part b, find the firmâs new optimal quantity.
