Reference no: EM13186822
The industry demand function for bulk plastics is represented by the following equation:
P=800-20Q
Where Q represents millions of pounds of plastic.
The total cost function for the industry, exclusive of a required return on invested capital, is
TC=300 + 500Q+10Q2
Where Q represents millions of pounds of plastic.
a. if this industry acts like a monopolist in determination of price and out-put, compute the profit-maximizing level of price and output.
b. What are total profits at this price and output level?
c. Assume that this industry is composed of many (500) small firms, such that the demand function facing any individual firms is P=$620
Compute the profit-maximizing level of price and output under these conditions (industry's total cost function remains unchanged).
d. What are total profits, given your answer to part (c)?
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