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Obtain the inverse demand function

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Suppose we a sole producer of pens in a market. If this sole producer of pens faces a demand function of the form qd=50-0.25P and a total cost function given as TC=20Q.

(a) Obtain the inverse demand function.

(b) Use your inverse demand function in (a) to derive the total revenue function (Hint: TR=P*Q and simply multiply the inverse demand function by Q).

(c) Use the idea on the lecture notes to calculate the profit-maximizing level of output.

(d) What is the firm's optimal price?

(e) Suppose the firm's total cost is now TC =16Q, calculate the new profit-maximizing level of output of the firm.

(f) What is the corresponding optimal price?

(g) Determine the total revenue using the optimal price and quantities in each case.

Reference no: EM132473389

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