Stumped with an Eco Math question :/?
Thursday, May 14th, 2009Urgh. I hate these assignments
Any help would be much appreciated! Especially if you can give some explanation that’s required in the second part!
Demand for a product produced by a firm is given by the expression: P = 96 – 3Q.
Total costs of producing Q units are TC (Q) = ½ Q2 + 42 – 2Q.
(I): Find expressions for fixed, average and marginal costs. Find expressions for total, average and marginal revenues. Find an expression for profit.
(II): Calculate the output that maximizes the total revenue. Compute the price elasticity of demand at this output. Explain the economic reasons for the value of the price elasticity of demand found at this level of output. How large is the maximum possible total revenue?
III): Calculate the profit maximising output. Compute the elasticity of demand at this output. Check if the demand is elastic or inelastic at this output and explain the economic intuition for the answer found. How large is the maximum possible profit?
KARLI
