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suppose a firm has the following demand and cost functions A. Calculate the profit function B. Find the profit maximizing quantity C. Find the profit maximizing price

suppose a firm has the following demand and cost functions A. Calculate the profit function B. Find the profit maximizing quantity C. Find the profit maximizing price

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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suppose a firm has the following demand and cost functions

A. Calculate the profit function

B. Find the profit maximizing quantity

C. Find the profit maximizing price

 
This image presents two key algebraic equations commonly used in economics for demand and cost functions. The equations are as follows: 1. Demand Function: \( Q(P) = 9006 - 158P \) This equation demonstrates the relationship between the quantity demanded (Q) and the price (P) of a product. According to this equation, the quantity demanded decreases as the price increases. The coefficient -158 indicates the rate at which demand decreases with an increase in price. 2. Cost Function: \( C(Q) = 39Q + 3798 \) This is a linear total cost function which describes the relationship between total cost (C) and the quantity produced (Q). In this equation, 39 represents the marginal cost, which is the cost of producing one additional unit of output. The constant term 3798 represents the fixed costs, which are costs that do not change with the level of output. These equations are fundamental in understanding how price impacts demand and how total cost varies with production levels in economic analysis.
Transcribed Image Text:This image presents two key algebraic equations commonly used in economics for demand and cost functions. The equations are as follows: 1. Demand Function: \( Q(P) = 9006 - 158P \) This equation demonstrates the relationship between the quantity demanded (Q) and the price (P) of a product. According to this equation, the quantity demanded decreases as the price increases. The coefficient -158 indicates the rate at which demand decreases with an increase in price. 2. Cost Function: \( C(Q) = 39Q + 3798 \) This is a linear total cost function which describes the relationship between total cost (C) and the quantity produced (Q). In this equation, 39 represents the marginal cost, which is the cost of producing one additional unit of output. The constant term 3798 represents the fixed costs, which are costs that do not change with the level of output. These equations are fundamental in understanding how price impacts demand and how total cost varies with production levels in economic analysis.
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