Question

You are the manager of a firm that sells its product in a competitive market at a price of $60. Your firm's total cost function is C = 33 + 3Q2 and marginal cost function is MC = 6Q. The profit-maximizing output for your firm is ___________.

Answer 1

Answer:

Firm's Maximising Output = 10 Units

Explanation:

Producer is at equilibrium at its profit maximising output.

Producer's Profit Maximising Equilibrium is where :

• Profit i.e Total Revenue - Total Cost is maximum
• TR - TC gap is maximum when : they are parallel, their slopes i.e Marginal Revenue MR & Marginal Cost MC are equal.

So, Profit is maximised where : MR = MC

MC = 6Q [Given] ; MR = Constant price in competitive market = 60

6Q = 60

Q = 60/10

Producer's Equilibrium Profit Maximising Quantity = 6