Neas-Seminars

Micro Mod 5: Homework


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By NEAS - 6/8/2005 10:38:32 AM


Microeconomics, Module 5, “The Behavior of Firms”

Homework assignment

(The attached PDF file has better formatting.)

Profit Maximization

A firm faces a demand curve of P = 130 – 5Q. The marginal cost for this firm is 20 + Q. The fixed costs are 500. Assume that the firm produces a quantity and charges a price to maximize profits.

A.    What is the marginal revenue curve facing the firm?
B.    What is the quantity produced by the firm?
C.    What is the equilibrium price charged by the firm?
D.    What are the total variable costs of the firm?
E.    What are the total costs of the firm?
F.    What is the total revenue of the firm?
G.    What is the net profit of the firm?
By NEAS - 8/19/2018 8:12:22 PM

 
edwardskielb - 2/26/2018 12:06:52 AM
Shouldn't the answer to part A. be 110 - 11Q? Why would the Marginal Revenue not be impacted by the marginal cost of the last unit produced? Additionally, this function means that the equilibrium quantity (Q = 10) minimizes the Marginal Revenue function and thus maximizes total revenue, which would seem to me to be correct. What am I doing wrong by adding the marginal cost to the marginal revenue equations posted by others?