Posted by mandy on .
Suppose a firm faces a downward sloping demand curve givven by the equation 1=100-1/3P. The firm's cost function is given by the equation C=30+1/4Q^2. Find the profit maximizing level of output.
always always always, MC=MR.
First rearrange the demand function to be P=f(Q). That is P=300 - 3Q
Now then Total revenue is P*Q. So TR=300Q -3(Q^2)
MR is the first derivitive of TR. So MR=300 - 6Q
MC is the first derivitive of TC. So MC=(1/2)Q
MC=MR - use algebra and solve for Q. Take it from here