You are the manager of a firm which produces according to the cost function C(Q) = 75+5Q2. Determine the profit maximizing output and price and the level of profits
To determine the profit-maximizing output and price, as well as the level of profits, we need to follow these steps:
1. Find the firm's revenue function.
2. Calculate the firm's marginal cost.
3. Determine the profit-maximizing quantity by equating marginal cost to marginal revenue.
4. Calculate the price corresponding to the profit-maximizing quantity.
5. Calculate the level of profits.
Let's go through each step:
Step 1: Find the firm's revenue function.
Revenue (R) is calculated by multiplying the quantity (Q) produced by the price (P). Since we don't know the price yet, we need to express revenue in terms of quantity only.
We can use the demand equation to find the price as a function of quantity. However, you have not provided the demand function or any information about the market, so we cannot determine the price or revenue function at this point. Please provide additional information about the demand function or any other relevant details.
Once we have the revenue function, we can move on to the next steps.