The market demand and supply functions for an electronic typewriter are
QD = 20,000 – 10P
QS = 10,000 + 20P
Western Electronics Inc. is one of many firms in this perfectly competitive industry. Its marginal and average cost functions are
MC = 10 + 2Q
AC = (1,000/Q) + 10 + Q
a/ What is the profit-maximizing output rate for Western?
b/ How much economic profit will be earned at that rate of output?
A) Given that the demand function is
And
The profit maximizing output is given at the equilibrium,
Where MR is:
B) at Q=905
Where TC is
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