A firm faces the following average revenue (demand) curve: P = 120 – 0.02Q where Q is weekly production and P is price, measured in cents per unit. The firm’s cost function is given by C = 60Q + 25,000. Assume that the firm maximizes profits. What is the level of production, price, and total profit per week?

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Author:BOYES, William
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Chapter23: Profit Maximization
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A firm faces the following average revenue (demand) curve:

P = 120 – 0.02Q

where Q is weekly production and P is price, measured in cents per unit. The firm’s cost function is given by C = 60Q + 25,000. Assume that the firm maximizes profits.

What is the level of production, price, and total profit per week?

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