Answer in Microeconomics for Doreen kabulika #160057

Consider a producer facing the following cost function MC(q,w)=100+q Assuming the fixed cost are 5000 and rhe output price is 100 find maximum profit

By the definition of the total revenue, we get:

“TR=PQ=100Q.”

Let’s find the marginal revenue:

“MR=dfrac{dTR}{dQ}=dfrac{d}{dQ}(100Q)=$100.”

The profit maximizing level of output will be when MR=MC:

“100+Q=100,”“Q=0.”

Let’s write the TC function:

“TC=FC+VC=5000+int MC(Q)dQ,”“TC=5000+int (100+Q)dQ=5000+100Q+0.5Q^2.”

By the definition of the profit, we have:

“pi=TR-TC=100Q-5000-100Q-0.5Q^2,”“pi=100cdot0-5000-100cdot0-0.5cdot(0)^2=-$5000.”