Question

Suppose the perfectly competitive price is given as $46 and the total cost of the firm is given by TC=14X+2X², find

a. The profit maximizing level of output for the firm?

b. The profit of the firm?

Answer 1

a. MC=P

$MC=TC'=(14X+2X^2)'=14+4X$

14+4x=46

4x=32

x=8

b. 

$profit=MR-MC=46\times8-(14+4\times8)=368-14-32=322$