1. A company has the following average income (demand) curve: P=100-0.01Q. Where Q is weekly production and P is price, measured in cents per unit. The company's cost function is given by CT = 50Q + 30,000. Suppose the firm maximizes its profits. a) What is the level of production, the price and the total profit per week? b) The government decides to impose a tax of 10 cents per unit on this product. What would the level of output, price, and profit be as a result of this?
1. A company has the following average income (demand) curve: P=100-0.01Q. Where Q is weekly production and P is price, measured in cents per unit. The company's cost function is given by CT = 50Q + 30,000. Suppose the firm maximizes its profits. a) What is the level of production, the price and the total profit per week? b) The government decides to impose a tax of 10 cents per unit on this product. What would the level of output, price, and profit be as a result of this?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. A company has the following average income (demand) curve: P=100-0.01Q. Where Q is weekly production and P is
a) What is the level of production, the price and the total profit per week?
b) The government decides to impose a tax of 10 cents per unit on this product. What would the level of output, price, and profit be as a result of this?
CT(Total cost)
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