Question

The demand function of a good is given by the expression Q³-8Q²+20Q+2
I) Find the level of output, which maximizes total revenue
II) Find the maximum profit

Answer 1

$$D(Q)=Q^3-8Q^2+20Q+2$$

i)

$$3Q^2-16Q+20=0$$

$$Q_{max}=2$$

ii)

$$p=2^2-8\times2^2+20\times2+2=18$$

$$Pr=18\times2=36$$