Compute profit maximizing price combination

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Reference no: EM1372410

Market demand and marginal revenue relations for Glove Box units are: P=$500,000-$250Q;MR=$500,000-$500Q;OSHA mandates that GB must install new eqpmt that will increase the $200,000 marginal cost of mfg to $250,000 per unit. The fixed expenses of $50million per yr will be unaffected.
a.calculate GB's profit maximizing price/output combination and economicprofit before the installation of the OSHA mandated equipmt.
b.calculate the same after the osha guidelines have been met.
c.who pays the economic burden of meeting OSHA guidelines.
(when I tried working this, for b. I had TR of 187,500,000; then subtracting costs: -50,000,000 + 250,000(500)=profit of 12,000,000. For part a. the profit was $40,000,000, with a difference of 28million, but I'm not sure how the economic burden thing works so if you could please help me with this and go over all the steps I would really appreciate it. thank you.

Reference no: EM1372410

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