In the market for foam fire retardant there is only one firm. The demand func-tion for the product is Q = 15,000 – 10P where Q is the annual sales quantity in tons and P is the price per ton. The firm’s total cost function (in dollars) is C = 1,400,000 + 300Q + 0.05Q2. a) How much foam fire retardant should this firm produce and sell in order to maximize its profit? What price should it charge? b) Compute the firm’s total profit. c) Suppose now that the firm faces a 20% increase in variable costs. Determine what impact this will have on the firm’s optimal choice.
In the market for foam fire retardant there is only one firm. The demand func-tion for the product is Q = 15,000 – 10P where Q is the annual sales quantity in tons and P is the price per ton. The firm’s total cost function (in dollars) is C = 1,400,000 + 300Q + 0.05Q2. a) How much foam fire retardant should this firm produce and sell in order to maximize its profit? What price should it charge? b) Compute the firm’s total profit. c) Suppose now that the firm faces a 20% increase in variable costs. Determine what impact this will have on the firm’s optimal choice.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In the market for foam fire retardant there is only one firm. The demand func-tion for the product is Q = 15,000 – 10P where Q is the annual sales quantity in tons and P is the
a) How much foam fire retardant should this firm produce and sell in order to maximize its profit? What price should it charge?
b) Compute the firm’s total profit.
c) Suppose now that the firm faces a 20% increase in variable costs. Determine what impact this will have on the firm’s optimal choice.
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