Assignment - Maximizing Profit 1 Title of the Paper Goes...

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Maximizing Profit 1 Title of the Paper Goes Here Sheheryar Shafique Keiser University Dr. Sol Dreshcher Managerial Economics April 8, 2017
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Maximizing Profit 2 Question No. 8.7 The demand and cost function for a company are estimated to be as follows: P = 100 - 8Q TC = 50 + 80Q -10Q^2 + 0.6Q^3 a. What price should the company charge if it wants to maximize its profit in the short run? MC= (d(TC))/dQ MC= 80-20Q+1.8Q^2 MR=(d(TR))/dQ TR= (P x Q)= {(100-8Q) x Q} = 100Q - 8Q^2 MR=(d(100Q-8Q^2))/dQ MR = 100- 16Q MC=MR 1.8Q^2-20Q+80=100-16Q 1.8Q^2-20Q+16Q-100+80=0 1.8Q^2-4Q-20=0 where a= 1.8 b=-4 c=-20 so, Q=(-b±√(b^2-4ac))/2a Q=(-(-4)±√(4^2-4(1.8)(-20)))/(2(1.8)) we take positive sign Q= 4.62 5 we cannot make 4.6 pieces of product; instead we rounded to the nearest whole number. P = 100 - 8Q
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Maximizing Profit 3 P= 100 - 8 (5) = 60 Profit in Q=5 Profit = Revenue-TC = (Q*P)-TC = (60*5)-275 = 25 B) To maximize revenuer we say that MR=0 MR=100-16Q 0=100-16Q 100/16=Q
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