If a company has $10,000 in variable cost per unit and $500,000 in fixed cost, then total cost is:
"TC = 10,000Q + 500,000."
If the company faces demand: P = 30,000 - Q, then total revenue is:
"TR = P*Q = 30,000Q - Q^2."
The profit function in terms of Q is:
"TP = TR - TC = (30,000Q - Q^2) - (10,000Q + 500,000) = -Q^2 + 20,000Q - 500,000."
Comments
Leave a comment