. Digital, Inc., is a manufacturer and distributor of blank computer disks for r
ID: 1241247 • Letter: #
Question
. Digital, Inc., is a manufacturer and distributor of blank computer disks for residential use. Revenue and cost relations are: TR= $4,500Q - $0.1Q2 TC= $2,000,000 + $1,500Q + $0.5Q2 Where Q is the quantity produced and sold per week. a. Determine the profit maximizing price, output and profit. (Be sure to show that it is a maximum or a minimum, the second order condition) b. Determine the revenue maximizing price, output and profit. (Be sure to show that it is a maximum or a minimum, the second order condition) **Please show ALL work. Thank you!Explanation / Answer
a) 4500 - 0.2 Q = 1500 + Q 3000 =1.2 Q Q= 3000/1.2 = 2500 d^2R/dQ^2 = -0.2 d^2C/dQ^2 = 1 and d^2C/dQ^2 > d^2R/dQ^2 --so satisfied output = 2500 TR = $ 10625000 TC = $ 8875000 profit = $1750000 b) Revenue Maximise 4500 -0.2 Q =0 Q= 22500 TR = $ 50625000 TC = $ 288875000 profit = - $23825000
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