Question

You are provided with the following demand and cost information for a monopolist.

P=60-0.25 Q and TC=Q²+40Q+50 Where P is price, Q is quantity of the product and TC is total cost. Determine the profit maximizing level of output and prices.

Answer 1

Profit= PQ-TC

=-$1.25Q^2+20Q-50$

Q=$\frac{-b}{2a}=\frac{20}{2(-1.25)}=8$

Profit=$-1.25\times64+20\times8-50$

=30