Question

A tractor manufacturing company knowa that the number of heavy duty tractors it sell depends on price per unit. If the demand function is
P=25000-2q and cost of production is
Tc=2000000-20000q +5q2
Where q :number of units sold
P:price
Tc : total cost
How many units should be produced to maximize profit and what is the maximum profit

Answer 1

$P_d = 25000-2q\\ T_c =2000000-20000q +5q²$

marginal cost = 10q -20000

marginal revenue = -2

In order to maximize profit, the firm should produce where its marginal revenue and marginal cost are equal.

$10q -20000 = -2\\ q = 2000$