Posted by Brett on Tuesday, October 16, 2007 at 9:44pm.
Hello ive been struggling with this problem for about 2 days now could someone walk me through it?
Suppose a firm faces a downward sloping demand curve given by the equation Q = 100  (1/3)P. The firm's cost function is given by the equation C = 30 + (1/4)Q^2. Find the Profit Maximizing level of output.
thank you

MICROECONOMICS  economyst, Wednesday, October 17, 2007 at 4:57pm
always always always, MC=MR.
First rearrange the demand function to be P=f(Q). That is P=33.33  Q/3
Now then Total revenue is P*Q. So TR=33.33Q (Q^2)/3
MR is the first derivitive of TR. So MR=33.33  (2/3)Q
MC is the first derivitive of TC. So MC=(1/2)Q
MC=MR  use algebra and solve for Q. Take it from here

MICROECONOMICS  economyst, Wednesday, October 17, 2007 at 5:03pm
oops, my bad algebra. I divided by 3 instead of multiplying by 3. So, P should be P=300  3Q.
But follow the same methodology as before starting from here.
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