How to find profit maximizing quantity from demand curve and MC?
Profit = revenues - cost = P*Q - cost You want to maximize profit, so take the first derivative of the profit function w.r.t Q, this must equal 0 dprofit/dQ = marginal revenue - marginal cost = 0 => profit is maximized when MR = MC marginal cost = is given marginal revenue= To find this, take your demand function, it's probably of the form P = a - bQ, multiply it by Q and take the first derivative w.r.t Q to obtain the MR Now equal MR and MC to find the optimal Q Put this Q into the demand function to find the optimal P
Profit maximizing, quantity and price?
A dominant firm operates in various markets. In one of these markets, it is a monopolist and produces with the following cost function: C(q1) = 5q1. The market demand is P = 1005 - Q. Find the profit maximizing P and q1 and profit. (I have worked out this part and got q1 = 500, P = 505 and profit = 249975). A new fringe firm with C = 28,900 + (qf^2)/4 enters the market. The fringe firm acts as a rice taker and maximizes its profits. The dominant firm, after the entry , subtracts the fringe firm's supply and behaves as a monopolist for the residual demand. Find the new profit maximizing P, q1, qf and profits as well.
Calculate profit maximizing price and quantity and monopoly profit. TC= 10+5Q, P= 25-Q?
The profit maximising price and quantity for a monopolist occur where marginal cost = marginal revenue. total revenue (TR) = PQ = (25 - Q)Q = 25Q - Q^2 marginal revenue = d TR / dQ = 25 - 2Q total cost (TC) = 10 + 5Q marginal cost = d TC / dQ = 5 MR = MC 25 - 2Q = 5 20 = 2Q Q = 10 At Q = 10... P = 25 - Q = 25 - 10 = 15 Therefore, profit maximisation occurs at P = 15, Q = 10.
How would a profit-maximizing quantity produced change for a monopolist when the marginal costs of production fall to zero?
Thank you for A2A. According to Varian’s microeconomics, monopolist aims to maximize profits by choosing output so that Marginal revenue equals to marginal cost in theory. Where marginal cost is a derivative of revenue and marginal cost derivative of total cost. More on the conditions: What are FOCs and SOCs?if the inverse demand function equals to 20–5qthen marginal revenue equals to 20–10q (derivative of revenue: 20q-5q^2).now we can compare the significance of marginal cost on output:if Mc=2, from first order condition(Mc=mr) follows that 20–10q=2; so that q=1.8if mc=0, 20–10q=0; q=2lower marginal cost increases the output in theoretical case of monopoly.
Question about profit maximizing?
Profit maximizing quantity corresponds to the intersection of the _________________ curves -total cost and total revenue -total revenue and profit -marginal cost and total revenue -total cost and marginal revenue -total cost and profit marginal cost and marginal revenue **My guess is marginal cost and total revenue...is that correct because I read in the text that profits are maximized when the firms total revenue exceeds its total costs I just want to be sure before I submit my answer...thanks! //Oh also if something is a price taker, then P=MC..right?
How to calculate price and quantity combination to maximize profit?
This is an example of third-degree price discrimination, as the firm can identify different consumer groups. The rule for profit-maximization is MR = MC. Given that this information was provided, we can simply solve for the choice variables, in this case, price. Setting MR = MC for the students: 500 - P = 20. Adding P to both sides, and then subtracting 20 from both sides P* = 480. This is the profit-maximizing price. To find the quantity, substitute P* into the demand curve for the students: Q = 500 - 1/2P. Substituting in P* Q = 500 - 1/2(480). Simplifying Q = 500 - 240. Reducing Q* = 260. This is the profit-maximizing quantity for the students. Setting MR = MC for the non-students: 750 - 2P = 20. Adding 2P to both sides and subtracting 20 from both sides. 2P = 730. Dividing both sides by 2 P* = 365. This is the profit-maximizing price for the non-student. To find the quantity, substitute P* into the demand curve for the non-students: Q = 750 - 2P. Substituting in P* Q = 750 - 2(365). Simplifying Q = 750 - 730. Reducing Q* = 20. This is the profit-maximizing quantity for the non-student group.
How to calculate profit-maximizing price?
you are the manager of a mom and pop store that can buy milk from a supplier at $3.00 per gallon. if you believe the elasticity of demand for milk by customers at your store is -4, then what is your profit-maximizing price? if anyone can explain to me this problem please I am way lost thanks
How to find profit maximizing quantity, I have found revenue function and cost function (included in details)?
TR=160Q-1/50Q*2 MR=160-0.02Q MC=MR, 160-0.02Q=100,Q=60/0.02=3,000. P=160-60=100
Is a firm profit-maximizing if it is cost-minimizing?
In economics, yes.The key to this idea is understanding opportunity cost. Economics defines profit as revenues minus costs, including opportunity costs. Opportunity cost measures the cost of a decision by the value of the alternatives implicitly passed up. Say a firm is deciding whether to hire another worker. Adding the worker would require the firm to pay more in wages, but would increase revenue by increasing output. If the firm decides not to hire the worker, they save the cost of his wages, but implicitly pay the opportunity cost of the revenue that worker would have generated. If the revenue from that worker (a.k.a. the opportunity cost) would have been greater than his wages, then choosing not to hire him actually increases economic costs. In that case, paying the worker's salary has a lower cost than passing up on the added revenue, so profit maximization and cost minimization both require that the firm hire the worker.In accounting, however, the answer is no. Accounting also defines profits as revenues minus costs, but this time "costs" only measures explicit costs like wages, taxes, and depreciation. Conspicuously absent from that list is opportunity cost. This means that the firm with the minimum accounting costs is one that simply doesn't do anything and therefore has no costs at all. In fact, I created three minimum cost firms while answering this post. If that doesn't make me a Top Writer, I don't know what does.