Answer to Question #189165 in Macroeconomics for HASAN ALI KHAN

Question #189165

If the demand function faced by a firm is:

Q = 90 – 2P

TC = 2 + 57Q – 8Q2 + Q3


Determine the level of output at which the firm maximizes the profit.

Determine the best level of output for the above question by the MR and MC approach.



1
Expert's answer
2021-05-06T14:30:56-0400

TPL=10L+5L2+L3TP_L = 10L + 5L^2 + L^3


MPL=dTPLdL=10+10L+3L2MP_L=\frac {dTP_L} {dL} =10+10L+3L^2


APL=TPLL=10+5L+L2AP_L=\frac {TP_L} {L} =10+5L+L^2



When L=5;


TPL=10(5)+5(5)2+(5)3TP_L=10(5) + 5(5)^2 + (5)^3


TPL=50+125+125TP_L=50+125+125


TPL=300TP_L=300



MPL=10+10(5)+3(5)2MP_L=10+10(5)+3(5)^2


MPL=10+50+75MP_L=10+50+75


MPL=135MP_L=135



APL=10+5(5)+(5)2AP_L=10+5(5)+(5)^2


APL=60AP_L=60


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