Calculate the firms maximized profit and revenue

Assignment Help Business Economics

Reference no: EM13894184

1. The demand function for a firm’s product is Q(P) = 50-P/10. The firm’s cost of production is C(Q) = Q^3-20Q^2+125Q. The firm’s problem is to choose the value of Q> or = 0 that maximizes its profit. You may occasionally find an irrational number and in those cases simplify your answer as much as possible.

Calculate the firm’s maximized profit, and the revenue and cost that produce that profit. (h) Calculate the elasticity of demand at the profit-maximizing point. (i) What is the firm’s markup at the profit-maximizing point? Confirm that this markup has the expected relationship to the elasticity of demand calculated in part (h). (j) Calculate the price(s) that would cause the firm to break even, meaning: earn exactly zero profit. (k) For this part only, change the demand function by assuming that demand (at any given price) is half of what it was before. In this new situation, calculate the firm’s inverse demand function, profit-maximizing point, and maximized profit. (l) For this part only, suppose that the problem is to maximize revenue instead of profit. Does this problem satisfy the global SOC? Find all points (if any) that satisfy the FOC. Calculate the revenue-maximizing price and quantity. (Justify your answer carefully.) Calculate the firm’s maximized revenue. How much profit does the firm sacrifice by choosing to maximize revenue instead of profit?

Reference no: EM13894184

Questions Cloud

Cost cutting cannot increase profits : Cost-effectiveness analysis compares the value of an innovation with its cost. Cost cutting cannot increase profits. Insurance creates a principal-agent relationship that is not common outside of healthcare. Which function of management is most conc..

Marginal product curve is increasing from workers : If the marginal product curve is increasing from workers 1-89 and then decreases steadily, crossing the horizontal axis at 190 workers, we know that the total output curve increases from workers 1-89, decreases from workers 90-189, and becomes 0 at t..

Autocorrelation does not bias the parameter estimates : Autocorrelation does not bias the parameter estimates, however, few econometricians would trust parameter estimates derived from models with auto-correlated residuals. Why?

What direction changes net exports and net capital outflow : Suppose that Bill, a resident of the U.S., buys software from a company in Japan. Explain why and in what direction this changes U.S. net exports and U.S. net capital outflow.

Calculate the firms maximized profit and revenue : Calculate the firm’s maximized profit, and the revenue and cost that produce that profit. (h) Calculate the elasticity of demand at the profit-maximizing point. (i) What is the firm’s markup at the profit-maximizing point? Confirm that this markup ha..

Social insurance programs and public assistance programs : Discuss the differences that exist between social insurance programs and public assistance programs. What is your opinion regarding how far the government should go in providing assistance to those who need these programs?

Involvement of government in the education system : Discuss the various ways federal, state, and local governments attempt to promote education as equality of opportunity. What are the some positives and negatives you see in the involvement of government in the education system?

Authority to stop the distribution of an approved drug : FDA assures that pregnant women are enrolled in investigational drug trials before a product is used when there is substantial use in women. FDA has the authority to stop the distribution of an approved drug until studies are done in pregnant women.

What is the non-accelerating rate of inflation : What is the non-accelerating rate of inflation? How does it relate to the natural rate of unemployment? What role do expectations play in determining the rate of inflation?

User Account

All Pages