Answer Happy

Suppose a firm must decide how much of a good to produce to maximize profits. The total benefits the firm receives from production is its total revenue, while the total cost incurred is its total production costs. Assume the inverse demand curve for the firm's product is P(Q) = 1,200 – 2Q and it faces total costs of TC (Q) = 20 + Q². Let's first consider the profit-maximization problem using optimization techniques. a. Specify the profit function, (Q). b. Using optimization techniques, calculate the quantity that maximizes this profit function. Call this QM. Verify this is a maximum using the second derivatives test. C. What price would the monopolist charge at this quantity? Call this PM. d. What is the profit earned?