Sole producer-output level-selling price and total profits

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Reference no: EM13818211

Zar Island Gas Company is the sole producer of natural gas in the remote island country of Zar. The company's operations are regulated by the State Energy Commission. The demand function for gas in Zar has been estimated as:

                        P = 1,000 - 0.2Q

where Q is output (measured in units) and P is price (measured in dollars per unit). Zar Island's cost function is:

                        TC = 300,000 + 10Q

In the absence of any government price regulation, determine Zar Island's optimal (a) output level, (b) selling price, and (c) total profits.

Reference no: EM13818211

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