Costs Analysis
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Use the following equations to demonstrate why a firm producing at the output level where MR = MC will also be able to maximize its total profit (i.e., be at the point where marginal profit is equal to zero). Note: To prove this, you must first present the algebraic expression for the profit function, and then the first-order condition to verify your answer.
P = 170 - 5Q
TC = 40 + 50Q + 5Q2
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Solution Summary
The marginal revenue is examined.
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P = 170 - 5Q
TC = 40 + 50Q + 5Q2
The firm's total profit function is
π = P Q - TC
π = (170 - 5Q )Q - (40 + 50Q + ...
Purchase this Solution
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