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microecon

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Our professor gave us a exercise to do for fun where he said to derive profit=PQ(P,A)-C(Q(A))-A (note Q is a function of A both for revenue and cost)
the answer I came up with is profit= Pdq/da -Cqfq/da-1

=Pdq/da -(d+c/dq)(dq/da)

Im not sure if I am right please help.

  • microecon - ,

    I'm having a trouble with your notation. This Jiskha site has mucho trouble in expressing mathmatical equations. (where did your "f" come from?)

    That said, this is more of a calculus question. MR is the first derivitive of total revenue, so Pdq/da looks corret. MC is the first derivitive of the cost function. Here use the chain rule. Set MR-MC=0 and ta-da you have your maximum profits equation.

    I hope this helps. Lotsa luck.

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